Housing

Urban Neighborhoods Do Not Have to Be Expensive

There is a simple reason why most new urban housing is either subsidized "affordable housing" or luxury apartments. The system is rigged.

The saga surrounding the Ridgecrest Apartments in far West Dallas is worth following if only for the fact that it offers a case study in everything that cities have done wrong with regards to developing affordable housing. That history in brief: federal and local governments fund affordable housing in poor neighborhoods, where the people who are most desperate for housing live. These places also tend to be isolated from job opportunities, quality educational institutions, civic and social services, and affordable transportation options. The affordable housing merely participates in perpetuating a cycle of poverty.

The flip side of this equation is the high cost of quality new development. New housing often comes at a premium, and neighborhoods that support the economics of new development experience a similar, but opposite isolating effect. As prices rise, these new neighborhoods become enclaves of wealthy residents who displace residents who can no longer afford to live in their up-and-coming neighborhood. Newer urban communities are labeled as agents of “gentrification.” The economic inequality gap entrenches.

What is so frustrating about this situation is that the newer, predominately wealthy urban neighborhoods—denser places with easier access to jobs, services, grocery stores, lower transportation costs, etc.—are precisely the kinds of environments that can help break cycles of poverty perpetuated by the isolation of poorer parts of town. But the problem remains: how to develop new, quality housing in urban areas that is affordable?

The short answer is that we have been thinking about the affordable housing question in entirely the wrong way for too long. Developers are blamed for only building luxury housing, and governments are blamed for not building enough or adequate affordable housing. But perhaps the problem has less to do with overcoming issues of simply supply, and rather addressing some of the underlying economic and regulatory assumptions that drive development.

That’s the argument this illuminating article on Strong Towns makes, laying out five reasons why cities like Dallas rarely (well, never really) see affordable units built in the parts of town that are most attractive or more equipped to promote economic mobility. You should read the whole article here, but here they are in brief:

  1. Construction Is Expensive

Obviously, the cost of developing new housing is going to drive up the rental rates or purchase prices of those units. But there’s the more profound point Strong Towns makes: as housing ages, it becomes more affordable. That means that historic preservation is not just a value cities should pursue in order preserve cultural integrity and continuity of their character, it is a means by which it can promote affordable housing in areas throughout the city.

We can see evidence of this in Dallas. Places like East Dallas and Oak Cliff have experienced their urban renaissances to a large extent because older housing stock was affordable when people began to move in and invest their money, time, families, and imaginations in the area. This, of course, led to an increase in values and some displacement. But it also allowed for the kind of economic, social, and cultural diversity that has driven its desirability.

With regards to displacement, the experience of neighborhoods like Oak Cliff, the M Streets, and elsewhere points to the fact that one affordable housing strategy should be to expand home ownership to lower income residents or stabilize rental rates in older neighborhoods—as opposed to simply building affordable units.

2. There Isn’t Enough Urban Housing

This one really hits home in a city with as little density as Dallas, and it is pretty easily to understand. New housing in urban neighborhoods is expensive because it is a rarity. As Christopher Leinberger pointed out last April at a summit here in Dallas, the number of “walk-up” style housing units is increasing in Dallas, but 98 percent of the DFW region’s land mass is still suburban-style development. High demand for a limited supply of urban housing is going to create high prices. Simple.

So how do we fix this? Well, let’s start with looking at the next item on the Strong Towns list:

3. Single-Family Zoning Laws Mess Everything Up

One reason why housing is so expensive is because zoning laws limit the ability to develop the kind of housing that would help dampen escalating prices and expand affordable housing into quality neighborhoods. That 98 percent suburban housing stock? It’s locked into zoning laws. That effectively limits the amount of volume developers can produce, driving up the price of land where development can occur.

Often where development is possible is on the suburban fringes of a region, which perpetuates “fiscally ruinous” sprawl. In urban neighborhoods that are zoned single-family, the rising cost of land will lead developers to tear-down homes and build more expensive single-family homes. This fuels displacement.

Again, we can see how this plays out looking at Dallas’ 1920s-era neighborhoods, like Oak Cliff. Single-family housing stock is protected by zoning and new constructed is limited to the high-density zone along Davis, ensuring that rental rates remain high and single-family home prices skyrocket.

How do we fix this one? Well, I wrote about an example back in December. Minneapolis-St. Paul just made the bold move of eliminating single-family housing zoning within its city limits. New homes must be multifamily. This will ensure that new development creates density, the available housing stock increases, and affordable units can be built in areas all over the city.

4. Cities Drive-up Costs With Sometimes Silly Regulations

There are lots of hidden costs to development that impact the bottom line: fire, ADA, design requirements, permitting costs, and other regulatory factors. In Dallas, there’s one gleaming regulation that should be readdressed to help bring down the cost of development: parking. The takeaway here: there are hidden costs that impact the affordability of housing that can be addressed without looking at the issue through the over-simplified metric of subsidizing new apartment blocks in poor neighborhoods.

5. We Outlaw the “Missing-Middle”

The housing conversation often falls into a stand-off between luxury and affordable housing stock. But that divide is perpetuated by the absence of the so-called “middle” of the development spectrum. These include duplexes, four-plexes, and other smaller buildings that can distribute the high cost of urban land across a handful of occupants:

Unfortunately, we’ve pretty systematically outlawed the Missing Middle in many neighborhoods. Single-family homes are the only thing that can be built on 80% of residentially-zoned land in Seattle, 53% even in renter-friendly San Francisco, and 50% in Philadelphia, to name just a few cities. In suburbs, it’s common for over 90% of land to be zoned for single-family residences exclusively.

This leaves multifamily housing, more often than not, to take the form of large apartment complexes outside of such single-family areas, where a developer has able to assemble a large contiguous chunk of land. Those huge buildings are more expensive to build, both per square foot and overall.

So where does that leave us? In short, with a need for a new affordable housing agenda, one that looks past the kind of monolithic thinking that creates housing projects like the Ridgecrest Apartments, and towards bold and politically challenging goals like rethinking single-family zoning and rolling back parking regulations.

Strong Towns points to handful of places that have implemented some of these ideas. The article argues that the answer lies in allowing urban development to progress through a gradual change or evolution—”from single-family to duplex, duplex to small apartment building, small apartment building to larger apartment-building.”

The luxury-only problem is to a large extent a function of the fact that we have eliminated incremental change from most corners of our cities. Neighborhoods composed of single-family houses are declared almost entirely off-limits to development. In the remaining areas, we thus make sure that intense pent-up market demand is concentrated like a fire hose, and that development is undertaken primarily at large scales (giant apartment complexes) and in needlessly expensive ways.

Dallas has the beginnings of a road map with its new housing plan, but I would like some of the many mayoral candidates raise a few bolder ideas in the upcoming election. That, however, may be politically difficult.

The fact is, there is a deeper, more ideologically entrenched aspect to this formula, and that is that single-family house ownership has long been promoted as the single most accessible way to build wealth in America. Expanding zoning that allows for more affordable housing in a single-family neighborhood is often seen as an attack on the most important–or the only–asset residents have.

How do we bridge this ideological gap? One way is to direct homeowners to the proof on the ground. So many of the most desirable neighborhoods in Dallas were built at a time before zoning locked-in the current development rules. The shapes of these neighborhoods–the bones that make them attractive–include a mix of single-family and modest-sized multi-family housing. Expanding the ability for developers to deliver these kinds of housing options to the market will merely make more areas of Dallas both attractive and accessible.

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Comments

  • dallasmay

    It’s a bit frustrating that there is a pervasive myth that there is no affordable housing in Dallas. That’s a myth. A simple Zillow search shows that there is lots of affordable homes on the market right now in almost every neighborhood in the city.

    What people mean by “there is no affordable housing” is that “there is no affordable move-in-ready 4-bedroom housing in the highly desirable neighborhoods with the best schools, where I can walk to my favorite restaurants and to work.”

    Seriously. Take the “Zillow Challenge”. Go to your favorite Realtor website, type in whatever price range you think is affordable, and post the screenshot of the results. There will be dozens, if not hundreds, of listings all over the city for properties for sale, on the market, right now.

    • dallasmay

      Ebby.com counts over 400 affordable homes for less than $200,000 on the market in the city of Dallas, right now.

      The “Affordability Crisis” is a myth.

      https://uploads.disquscdn.com/images/37ba6f9dec9e04c11f577372b13eca5b07d533f0a16fbab8c6ebfb3a9c4dc08a.png

    • Los_Politico

      Our cops say this all the time. What they mean is there’s no big and cheap housing in all-white neighborhoods.

      • dallasmay

        That’s not even true. If you are willing to give in on size and number of bedrooms (if the kids can bunk up together and you can live without three bedrooms) you can still find reasonably affordable housing in those neighborhoods.

        • Los_Politico

          I agree, but only 15% of cops live in the city. The rest live in new builds in Anna.