Building affordable housing • Hacker News Board

Re: Building affordable housing

#41

Post by patrickyeon » Thu, Jan 26, 2017, 2:06 AM UTC

The most novel part of that article for me was all the way at the end:

> But what about the existing starter homes built after WWII, aren't they still affordable?

> Well, no. The big problem of a starter home is that it's only cheap when it is first built, because it is barebone. Once the owners start making the house theirs to accommodate the growing needs of the family, the house gets bigger and more luxurious. Every addition to the house results in higher market value because of increased desirability. So once the original owners are ready to move out, the house is no longer a starter home, but a big, well-furnished home from which the owner will expect to recover the costs of remodeling.

> That is the issue of the "starter home" or "grow home" idea. That home is only affordable once, for its first owners. So for every generation to get its "starter home", every generation has to build entirely new neighborhoods in greenfield areas, where land is cheap. When a metropolitan area matures, this ideal no longer works, the greenfield areas are just too far and are disconnected from the city. So, what can be done?

Not only is it expensive to buy a home, you can't even buy one cheap that somebody else got for cheap because they've (likely) made it more valuable by making it more liveable for themselves!

Re: Building affordable housing

#42

Post by baursak » Thu, Jan 26, 2017, 2:25 AM UTC

fnl wrote: post #40

baursak wrote: post #26

Earlier quoted context omitted.

In places were housing is expensive, land will be the majority of the cost. In places where land is cheap, housing is already not expensive. The way to affordable housing is high density, mid-to-high rise condos.

Isn't that precisely the way cities are built in Europe? If so, housing isn't necessarily cheap/affordable there, either.

It should be relatively cheaper in places with lots of mid-to-high rise development. For example, Berlin is relatively cheap as I understand it. London is expensive, but if you randomly click around it on Google StreetView, you'll see there's way more 1-2 story townhouses there than 5-10 story residential buildings.

Re: Building affordable housing

#43

Post by elihu » Thu, Jan 26, 2017, 2:40 AM UTC

patrickyeon wrote: post #41

The most novel part of that article for me was all the way at the end: > But what about the existing starter homes built after WWII, aren't they still affordable? > Well, no. The big problem of a starter home is that it's only cheap when it is first built, because it is barebone. Once the owners start making the house theirs to accommodate the growing needs of the family, the house gets bigger and more luxurious. Eve…

What was novel to me but seemingly obvious now that it's been pointed out is how the introduction of cars and highways created a vast oversupply of usable land that previously wasn't practical to build on because workers had no way to get to their city jobs, and that's a big part of why housing was so cheap after WWII.

Perhaps the lesson here is that if we want affordable housing, we need better forms of high-volume transportation that can move people rapidly between city centers and distant under-developed outskirts.

Re: Building affordable housing

#44

Post by gwbas1c » Thu, Jan 26, 2017, 2:52 AM UTC

patrickyeon wrote: post #41

The most novel part of that article for me was all the way at the end: > But what about the existing starter homes built after WWII, aren't they still affordable? > Well, no. The big problem of a starter home is that it's only cheap when it is first built, because it is barebone. Once the owners start making the house theirs to accommodate the growing needs of the family, the house gets bigger and more luxurious. Eve…

> Not only is it expensive to buy a home, you can't even buy one cheap that somebody else got for cheap because they've (likely) made it more valuable by making it more liveable for themselves!

The first thing I did when I bought my home was fix the "problem" that made it sit on the market so long and sell for a discount.

(Fortunately, it was a landscaping problem that was easy for me to fix, but harder for other buyers to fix.)

Now I expect to, at a minimum, make my investment back if I sell the home.

Re: Building affordable housing

#45

Post by fnl » Thu, Jan 26, 2017, 2:58 AM UTC

baursak wrote: post #42

fnl wrote: post #40

Earlier quoted context omitted.

Isn't that precisely the way cities are built in Europe? If so, housing isn't necessarily cheap/affordable there, either.

It should be relatively cheaper in places with lots of mid-to-high rise development. For example, Berlin is relatively cheap as I understand it. London is expensive, but if you randomly click around it on Google StreetView, you'll see there's way more 1-2 story townhouses there than 5-10 story residential buildings.

Berlin has become a lot more expensive recently, the cheap housing there is mostly historical now. And, income in Europe is much lower on average than in the US (except London, most parts of Switzerland, and such places), so you first have to correct for that, too.

Yes, high rises make housing cheaper, but that comes at a price: Hearing what the neighbors around you are doing and often even saying (or their TVs/music/...!) at all times, not having some "green space" or yard of your own (and in most cases not even a shared green space), having to come to terms with all co-owners when you want to change something outside your flat. Etc.

For the price you (don't) pay, the European model sucks. (Disclaimer: I'm European... :-))

Re: Building affordable housing

#46

Post by tejohnso » Thu, Jan 26, 2017, 3:03 AM UTC

Most people talk about land being the main cost barrier, but there are plenty of other costs that add up to the point where you're better off buying a standard resale home.

Having acquired land and being accustomed to living in ~600sqft all my adult life I thought I could build a reasonable living space for about $50,000. Once I started looking into it I ran into:

  - land clearing / prep ~$10,000
  - utility hookups and equipment ~$15,000
  - impact fees & permitting ~$5,000
  - foundation ~$5,000

Then comes the actual house construction. I was hoping for a company that would provide a livable shell that I could then improve upon while living in it. Long story short, it just didn't work out at the price I was hoping for.

Re: Building affordable housing

#47

Post by ksec » Thu, Jan 26, 2017, 3:16 AM UTC

erentz wrote: post #28

CapitalistCartr wrote: post #5

In every American city I know, 80%-90% of the cost of an existing home is the lot, not the house. I don't know how to overcome this, but I understand it is caused by politics, suggesting it needs a political solution. When Florida was abuilding like crazy after WWII for the next 25 years, the lot was usually about 10%.

Where is this? In Seattle the cost of construction is around $250-300 per sqft assuming mid-range quality of materials and a flat(-ish) site. You'd need to spend between $200-$500k to buy a lot in Seattle. So a reasonable 2,000 sqft house is going to be anywhere from 70-50% of the cost.

Is that the cost for house? Do you have any data on building prices per sqft for High rise building?

Re: Building affordable housing

#48

Post by maxsilver » Thu, Jan 26, 2017, 3:20 AM UTC

baursak wrote: post #26

_m8fo wrote: post #7

Tiny homes are 150 to 250 square feet homes that that can be built anywhere from ~$20,000 to ~$50,000. The person who figures out how to mass produce these houses (each one is only about maybe the size of two RVs) for ~$10,000 will change this world.

In places were housing is expensive, land will be the majority of the cost. In places where land is cheap, housing is already not expensive. The way to affordable housing is high density, mid-to-high rise condos.

> The way to affordable housing is high density, mid-to-high rise condos.

How though? Density sounds good on paper, and has tons of side benefits, but (as the blog post explains) the cost of land + construction jumps significantly.

I know here in the US, there basically is no such thing as "affordable high density condos". High density urban housing is expensive, by definition. So much so that there isn't a single unsubsidized affordable high-density urban housing unit in my entire state.

The only place I'm aware of that has affordable urban housing is Japan. And that's mainly due to a combination of having no meaningful population growth, and having excellent public transit literally everywhere. Two things the US simply can't have in our lifetime

Re: Building affordable housing

#49

Post by elihu » Thu, Jan 26, 2017, 3:30 AM UTC

Something I've been thinking about on and off since YC announced their "New Cities" research project [1] is whether you could create more affordable cities from scratch in undeveloped land as a sort of speculative public-interest investment.

Suppose you begin with a large lump of money sufficient to buy at least several square miles of rural land and to pay for some basic infrastructure (roads, power lines, sewer, etc..).

At first, you practically give plots of land away to anyone willing to build a house. (Since it's rural, there's little reason to be there unless there's some critical mass of people already there.) Then, as people start moving in, you can raise the price of the lots to recover some of your initial investment and pay for additional infrastructure. Eventually, you should be able to sell lots at far more than the original land cost and recover your investment. This might also spare residents from having to pay taxes until the city is fully grown and there are no more lots to sell.

Some thoughts:

The new city should ideally be near at least some neighboring town with schools, stores, a hospital, and so on to make bootstrapping easier.

This would be an easier sell both to county government and prospective citizens if it were managed by a non-profit institution that is contractually obligated to re-invest profits back into the city. This could be similar to a normal city government, except that in this case the city starts off by owning all the buildable lots.

Partnering with a University that wants to build a new campus on cheap land would be ideal.

Figuring out the right amount of land to buy up-front would be difficult. Too much and it's too expensive and you never sell it all, too little and you'll end up having to buy more adjacent land later at steeply inflated prices or let some other developer buy it and let them absorb all the profits without re-investing it back into the city.

[1] https://news.ycombinator.com/item?id=11987032

Re: Building affordable housing

#50

Post by aplomb » Thu, Jan 26, 2017, 5:14 AM UTC

One angle to make housing affordable is to outlaw mortgage products beyond 15 years (along with ARMs), require 20% down, and eliminate the tax deduction on interest - of course you can't do this overnight.

Housing is a basic necessity and we need to get the rampant speculation and financialization out - we're all stuck in this game of musical houses waiting for the music to stop.