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I still like the idea of a developer building a large condo tower with the Ikea-style tiny apartments sold at an affordable price. It could offer something like the following:
240 sq ft studios - $60,000
380 sq ft 1 bedroom - $75,000
590 sq ft 2 bedroom - $100,000
There’s your affordable housing right
There!
Your per square foot costs about range from $250 (60,000/240) to $169 (100,000/590) and are below construction costs for the larger apartment. Also, 590 square feet is a small one bedroom not two and at $250 a square foot would cost $147,500.
I guess the Minneapolis 2040 plan is a developer giveaway in one post yet the kind of real estate development it would facilitate is not economically viable in another.
Sometimes knee-jerk opposition just needs reasons, even if they contradict each other.
I guess the Minneapolis 2040 plan is a developer giveaway in one post yet the kind of real estate development it would facilitate is not economically viable in another.
Sometimes knee-jerk opposition just needs reasons, even if they contradict each other.
There is no contradiction.
Minneapolis 2040 doesn’t dictate selling prices of the units it would allow. It makes the assumption that if more units are allowed to be built with fewer zoning restrictions, the prices of those units will be more affordable. There is no evidence that 2040 can increase supply to the point that real estate prices are affected.
Not economically viable was my description of the prices suggested in the post on which I was commenting. I was also suggesting that the prices suggested in that post were not consistent on a per square foot basis, as one would expect in the single development at Nicollet and Lake that was being discussed.
My apologies if I wasn’t clear about that.
Last edited by Glenfield; 11-27-2018 at 12:51 PM..
75% of Minneapolitans live in areas zoned for single-family housing.
Do a search on themlsonline.com, filter for a maximum price of $200,000, and look at neighborhoods such as Uptown, Lyn-Lake, Lowry Hill East. What do you see? Multi-unit buildings broken up into condos in neighborhoods containing a mixture of housing types (single-family, duplexes/triplexes/quadplexes, multi-unit rentals) are about 90% of your options.
As these more expensive neighborhoods show, the only viable ownership opportunities for the increasing number of people who cannot afford single family homes are multi-unit buildings of one sort or another. This is not theory or conjecture, it is the current state of affairs and is therefore neither 'dubious' nor 'lies'.
If 75% of Minneapolitans live in areas zoned for single-family housing, and multi-unit properties are currently the only affordable options available to many people who might like to own, without zoning changes fewer and fewer people will be able to own in fewer parts of the city. Scarcity of property will push up prices just as it does in any free or mixed market environment.
As these expensive neighborhoods also show, a mix of of multi- and single- family housing does not destroy neighborhoods - in fact many of these neighborhoods are quite charming (Aldrich through Girard avenues between Franklin and 36th street are good examples).
As these mixed housing-type neighborhoods also show, single family housing will not be completely and utterly eliminated by 'greedy developers' whenever they get the chance as these neighborhoods have been zoned that way for decades.
Pretty much every city - from San Francisco to Seattle - who has faced the problem of success- untenable housing cost increases fueled by population growth - has declined to do any kind of meaningful upzoning due exactly to the 'character' arguments bandied about in the current debate about MPLS 2040. The result is a housing crisis considerably more advanced than we have here. In short, we have seen the future of cities where current property owners stifle the growth of housing availability, and its a future many of us here in Minneapolis would like to avoid for our city.
Furthermore, the size of the triplexes will not be greater than what is allowed under current zoning. Pretty much no matter where you live in this city, someone can build a single-family McMansion right next door to you under current regulations. The setbacks and height regulations that currently apply to what can be built next door to your single family home would apply to any prospective triplex (addressing only this aspect of the plan - 'transit corridors' will be upzoned but that isn't what has everyone so exercised).
The notion that upzoning will not 'fix' the affordable housing problem is correct but utterly beside the point. It is one piece of the puzzle that people are decrying because it isn't the entire puzzle (nor was it meant to be). It is an influencer not a determiner, and leverages the supply/demand dynamic basic to economics. It leverages market forces incrementally more in the favor of people who cannot afford single family housing whose prices have been inflated by current zoning.
Upzoning is neither 'top-down' (when has loosening restrictions ever realistically been 'top-down'?) nor is Mpls 2040 anything new: this kind of zoning review happens every 10 years. Zoning review is no more or less 'social engineering' than it was when it produced the current environment than we live in now...in fact, scratch that: reducing restriction *is* less social engineering by its very nature.
Minneapolis 2040 doesn’t dictate selling prices of the units it would allow. It makes the assumption that if more units are allowed to be built with fewer zoning restrictions, the prices of those units will be more affordable. There is no evidence that 2040 can increase supply to the point that real estate prices are affected.
Not economically viable was my description of the prices suggested in the post on which I was commenting. I was also suggesting that the prices suggested in that post were not consistent on a per square foot basis, as one would expect in the single development at Nicollet and Lake that was being discussed.
My apologies if I wasn’t clear about that.
So you didn't say this?:
"It’s admirable that you want this to happen but real estate development has to be financially viable or it just doesn’t happen.
And that in a nutshell is the problem with the 2040 plan: it’s not grounded in reality."
Or are you saying that increasing supply relative to demand does not have a downward pressure on prices?
"It’s admirable that you want this to happen but real estate development has to be financially viable or it just doesn’t happen.
And that in a nutshell is the problem with the 2040 plan: it’s not grounded in reality."
Or are you saying that increasing supply relative to demand does not have a downward pressure on prices?
Supply cannot be increased sufficiently to put downward pressure on prices. That’s not what 2040 tries to accomplish anyway. The city is not trying to tank existing real estate prices. That would be political suicide.
They are hoping that by removing certain zoning restrictions, developers will choose to build low cost housing. By and large, they will not. Developers will not build low priced units if they can build and sell higher priced units. There will be more multi-family development under 2040, but the amount of low cost housing will be limited to what us politically acceptable in order the enable the high end development that us the real objective of the developers’ lobbying efforts.
Housing in Minneapolis and St Paul is generally more expensive than comparable housing in the surrounding area and has been for some time. Building 15 story apartment buildings across from Minnehaha Falls will not change that.
Supply cannot be increased sufficiently to put downward pressure on prices.
Did you really mean to say this? Are we just chucking the basics of Economics completely out the window?
Quote:
That’s not what 2040 tries to accomplish anyway. The city is not trying to tank existing real estate prices. That would be political suicide.
You are correct. It is not trying to tank existing real estate prices. It's trying to take single family lots and allow multi-family buildings to be put in the same spot. As is currently shown by existing buildings in Minneapolis, that results in living units that are affordable at a lower price.
There's this fascinating thing about probability theory: what is the case is necessarily possible. It is the case that multi-unit, multi-owner buildings are the most affordable housing in neighborhoods where they have been allowed to be built. Full stop. This is proven by experience and actual neighborhoods existing in our city right now.
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They are hoping that by removing certain zoning restrictions, developers will choose to build low cost housing. By and large, they will not. Developers will not build low priced units if they can build and sell higher priced units.
Again, the current reality showing that the only 'affordable housing' available in certain neighborhoods is from multi-unit buildings belies this.
Quote:
Housing in Minneapolis and St Paul is generally more expensive than comparable housing in the surrounding area and has been for some time. Building 15 story apartment buildings across from Minnehaha Falls will not change that.
I can't even guess at the relevance here.
Last edited by Thedosius; 11-27-2018 at 02:44 PM..
Did you really mean to say this? Are we just chucking the basics of Economics completely out the window?
I don't think you are really arguing that the effect of 2040 will be to depress real estate prices by flooding the market with supply. City officials claim that 2040 will not adversely affect the price of existing real estate.
Quote:
You are correct. It is not trying to tank existing real estate prices. It's trying to take single family lots and allow multi-family buildings to be put in the same spot. As is currently shown by existing buildings in Minneapolis, that results in living units that are affordable at a lower price.
Instead, you seem to be arguing that because multi-family housing CAN be more affordable that is the type of housing unit that developers will choose to build.
Quote:
There's this fascinating thing about probability theory: what is the case is necessarily possible. It is the case that multi-unit, multi-owner buildings are the most affordable housing in neighborhoods where they have been allowed to be built. Full stop. This is proven by experience and actual neighborhoods existing in our city right now.
There are also some very expensive multi-family buildings in the city. The apartments west of Uptown, downtown by the River, in Linden Hills, none of these could be thought of as affordable.
Quote:
Again, the current reality showing that the only 'affordable housing' available in certain neighborhoods is from multi-unit buildings belies this.
No one is arguing that single-family homes are cheaper than apartments of comparable size and amenities.
Quote:
I can't even guess at the relevance here.
The apartments that will be built across from Minnehaha Falls Park will be luxury units, not affordable housing.
It all comes down to what will the developers choose to build. There is also nothing in 2040 that requires that new construction be owner occupied. It is likely that much of the low cost housing built will be rental units.
I think they will build enough affordable units to give political cover to the many luxury units that they build. In the end, 2040 will do almost nothing to make more affordable housing available in Minneapolis and there is not a shred of empirical evidence to the contrary.
Last edited by Glenfield; 11-27-2018 at 03:49 PM..
Your per square foot costs about range from $250 (60,000/240) to $169 (100,000/590) and are below construction costs for the larger apartment. Also, 590 square feet is a small one bedroom not two and at $250 a square foot would cost $147,500.
And why would a developer build and sell cheap apartments when the neighborhood is gentrifying and they can sell luxury units?
It’s admirable that you want this to happen but real estate development has to be financially viable or it just doesn’t happen.
And that in a nutshell is the problem with the 2040 plan: it’s not grounded in reality.
There was zero math and scoence put into my figures. I do stand by the belief that affordable housing could be financially feasible if they were smaller. Throw in cheaper carpet and lower end appliances, etc. It could be done.
There was zero math and scoence put into my figures. I do stand by the belief that affordable housing could be financially feasible if they were smaller. Throw in cheaper carpet and lower end appliances, etc. It could be done.
I have seen estimates of multi-family apartment building construction costs of $125-$200 per square foot so clearly reduced size is going to lower the cost per dwelling unit. Not sure what the market is to sell an apartment of less than 500 square feet. I rented a one bedroom that was about 600 square feet and it was ok for one person but I wouldn’t have bought it had the building gone condo.
The profit margins on luxury apartments just have to be so much higher than affordable units because the real cost difference is in finishes and amenities. This is why I think the developers will use the room under the 2040 zoning rules to build higher end apartments. It’s simply more profitable for them.
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