Yes, You Can Build Your Way to Affordable Housing (Atlanta: safe area, homebuyer)

[bu2]

Originally Posted by cqholt

You'd be surprised how many City Council Candidates that company has given campaign donations to.
http://atlantacity.gaeasyfile.com/SearchResults.aspx

Its the Atlanta metro way.

Its another reason excessive zoning and government controlled development is bad for the area. MARTA, the city and county should not be in the real estate development business. Its mainly a way to develop bribes for government officials.

[magnetar]

Weird how the people who think MARTA shouldn't be allowed to develop their empty land are the same people who generally don't think MARTA should be allowed to function at all.

[arjay57]

Originally Posted by fourthwarden

Yep, and if you make housing expensive to build, all that is built is expensive housing.

If this guy is getting land really cheap, why is he building expensive housing?

[fourthwarden]

Originally Posted by arjay57

If this guy is getting land really cheap, why is he building expensive housing?

If you make housing expensive to build, all you will get is expensive housing. I was talking in general, not explicitly about the AHA article.

As to the article, there're still the forces of supply and demand at play. These would only be small additions to supply in a market with massive pent up demand. It makes no sense to charge below market rate when the demand is there for housing, even if that market rate is expensive stock.

Enable cost-effective additional supply on a large scale, meet demand, and see prices stabilize. Surpass demand, and see prices fall.

That said, I would have no issue with the AHA mandating an appropriate level of below-market rate developments such that the developments can still be profitable projects, given the good deal on land. Not just a few units, but the entire development as well, since a few units below market rate just drives up prices for those non-affordable ones. As long as the profit margin is such that the owner is still incentivized to maintain their properties, and the rents grow as average prices do, then sure.

Of course, given the pent-up demand, they will still be a drop in the bucket, only helping a few, but that's better than nothing. In fact, don't be surprised if those low-rent units just fill in with non-low-income people anyway.

[arjay57]

Originally Posted by fourthwarden

If you make housing expensive to build, all you will get is expensive housing. I was talking in general, not explicitly about the AHA article.

As to the article, there're still the forces of supply and demand at play. These would only be small additions to supply in a market with massive pent up demand. It makes no sense to charge below market rate when the demand is there for housing, even if that market rate is expensive stock.

Enable cost-effective additional supply on a large scale, meet demand, and see prices stabilize. Surpass demand, and see prices fall.

One of the factors you have to consider in places like the ATL is that there's still plenty of demand for high end housing.

Hence developers like to build high density, high profit, expensive housing.

[arjay57]

Originally Posted by fourthwarden

That said, I would have no issue with the AHA mandating an appropriate level of below-market rate developments such that the developments can still be profitable projects, given the good deal on land. Not just a few units, but the entire development as well, since a few units below market rate just drives up prices for those non-affordable ones. As long as the profit margin is such that the owner is still incentivized to maintain their properties, and the rents grow as average prices do, then sure.

Of course, given the pent-up demand, they will still be a drop in the bucket, only helping a few, but that's better than nothing. In fact, don't be surprised if those low-rent units just fill in with non-low-income people anyway.

You will always have plenty of demand for lower priced housing. I have lived in low priced housing many times myself, and we would have been happy to get a better house in a better location for a reduced price.

However, our approach was to sort of work our way up the ladder. We'd save a little money and wait till our income went up. We'd also spruce up the place we were living in and sell it, hopefully for a profit. Then we'd plow that and our savings and increased income into a more desirable situation.

That is slower but if you hang in there it generally works. Color me old school, but that was more in keeping with my orientation than insisting that people with nicer homes break up their lots and allow me to build whatever I wasnted next door, including zero lot line projects with no front setbacks and no provision for parking.

What we found is that housing is often more expensive in high density areas, and cheaper where there is lower density. The problem with arguing that increased density results in lower prices is that it doesn't take into account all the many other factors that go into housing prices.

[fourthwarden]

Originally Posted by arjay57

One of the factors you have to consider in places like the ATL is that there's still plenty of demand for high end housing.

Hence developers like to build high density, high profit, expensive housing.

Sort of. Not that there isn't demand of high-end housing, but it's also the generally only stuff that's able to be built to meet a profit point. If it were easier, and cheaper to build housing, we'd not only see the high-end demand met, but people playing in the lower rent market as well.

Originally Posted by arjay57

You will always have plenty of demand for lower priced housing. I have lived in low priced housing many times myself, and we would have been happy to get a better house in a better location for a reduced price.

There's a difference between 'I just want a cheaper house' and 'I can't afford to live here any more'. Given how fast housing prices have been rising compared to both income and inflation, it's mostly the second one that's been happening.

Given that we're not even meeting housing demand at the upper levels, though, there is a ton of bleed-down where people are taking all available housing, even if they could afford more, or if they really can't afford it. Hence the consistently shrinking vacancy rates.

However, our approach was to sort of work our way up the ladder. We'd save a little money and wait till our income went up. We'd also spruce up the place we were living in and sell it, hopefully for a profit. Then we'd plow that and our savings and increased income into a more desirable situation.

That's great. I'll just tell that to all the people whose income has not kept up with the quickly rising housing prices. Surely they can afford to skimp and save while prices continue to rise due to a drastic under supply of housing.

Certainly there's also enough housing for those people to do so on the lower ends, even though 73% of our rental prices are over $1000 a month, which is too expensive for over 40% of the metro. Oh, and let's just pretend all the 'affordable' units that are being shut down aren't going to further hurt that disparity.

That is slower but if you hang in there it generally works. Color me old school, but that was more in keeping with my orientation than insisting that people with nicer homes break up their lots and allow me to build whatever I wasnted next door, including zero lot line projects with no front setbacks and no provision for parking.

Okay, you're dangerously old school. As in you don't seem to grasp the reality of the current housing situation. What once worked for you is not a viable situation for the majority of people anymore. The world has changed since you were working your way through the housing ladder, and the methods for handling housing must change as well.

Oh, and I will say it ONE MORE TIME, I am NOT telling people the HAVE to do a damned thing with their property. I am just saying the SHOULD BE ABLE TO to do things that we know will absolutely enable us to properly meet the massive amount of pent up demand, and have a shot at retaining lower-income and at-risk residents.

What we found is that housing is often more expensive in high density areas, and cheaper where there is lower density. The problem with arguing that increased density results in lower prices is that it doesn't take into account all the many other factors that go into housing prices.

Well, what you found is quantitatively wrong and you have it causally backwards. Demand for a large number of people living in an area leads to high values. High property values, sometimes, lead to density. There are tons of very expensive low-density areas as well, mostly because there's a ton of unmet demand for living in those places. Just as there are inexpensive high-density areas because demand to live there was met.

The problem with arguing that increased density results in higher prices, is that you're ignoring the very real unmet demand for housing. It really is that simple Arjay. To say otherwise is to ignore measurable, quantifiable reality.

[evannole]

Originally Posted by fourthwarden

Sort of. Not that there isn't demand of high-end housing, but it's also the generally only stuff that's able to be built to meet a profit point. If it were easier, and cheaper to build housing, we'd not only see the high-end demand met, but people playing in the lower rent market as well.




There's a difference between 'I just want a cheaper house' and 'I can't afford to live here any more'. Given how fast housing prices have been rising compared to both income and inflation, it's mostly the second one that's been happening.

Given that we're not even meeting housing demand at the upper levels, though, there is a ton of bleed-down where people are taking all available housing, even if they could afford more, or if they really can't afford it. Hence the consistently shrinking vacancy rates.



That's great. I'll just tell that to all the people whose income has not kept up with the quickly rising housing prices. Surely they can afford to skimp and save while prices continue to rise due to a drastic under supply of housing.

Certainly there's also enough housing for those people to do so on the lower ends, even though 73% of our rental prices are over $1000 a month, which is too expensive for over 40% of the metro. Oh, and let's just pretend all the 'affordable' units that are being shut down aren't going to further hurt that disparity.



Okay, you're dangerously old school. As in you don't seem to grasp the reality of the current housing situation. What once worked for you is not a viable situation for the majority of people anymore. The world has changed since you were working your way through the housing ladder, and the methods for handling housing must change as well.

Oh, and I will say it ONE MORE TIME, I am NOT telling people the HAVE to do a damned thing with their property. I am just saying the SHOULD BE ABLE TO to do things that we know will absolutely enable us to properly meet the massive amount of pent up demand, and have a shot at retaining lower-income and at-risk residents.



Well, what you found is quantitatively wrong and you have it causally backwards. Demand for a large number of people living in an area leads to high values. High property values, sometimes, lead to density. There are tons of very expensive low-density areas as well, mostly because there's a ton of unmet demand for living in those places. Just as there are inexpensive high-density areas because demand to live there was met.

The problem with arguing that increased density results in higher prices, is that you're ignoring the very real unmet demand for housing. It really is that simple Arjay. To say otherwise is to ignore measurable, quantifiable reality.

I think you exaggerate a bit about the run-up in housing prices. They are at all-time highs for the metro area, yes, but they're also barely above where they were in late 2007, before the crash.

https://fred.stlouisfed.org/series/ATXRNSA

The CAGR from the early 2000s to 2007 was around 4%, and the CAGR over the past four years has been 5%. So, yes, higher, but hardly a quantum shift.

Using 2012 as your reference point, as you have repeatedly done, is intellectually dishonest.

[arjay57]

Housing prices in the ATL, adjusted for inflation, are not a whole lot different than they were 25 years ago.

Let's also remember that mortgage interest rates were brutal back in those days. Many of us can remember when you paid 14% or more to buy a house.

Case-Shiller Home Price Trends in 20 Cities - Real Estate Decoded

[evannole]

Good find, Arjay. Also, look at how the other large sunbelt metros (Charlotte, Dallas, Las Vegas, Miami, Phoenix, Tampa) have fared. Atlanta is well below each and every one of them, and considerably below the US as a whole as well.