9-line access access management access point accessibility ADA air quality alignment amenity antiplanner atlanta BART BID bike Blogs boston branded bus branded buses brookings brt bus Bus Rapid Transit BYU capacity car pool cars central link Centrality certification commuter rail condo conformity congestion congestion pricing connections consistency coverage crossings CRT cycling DART dedicated dedicated right of way density denver depreciation developers development dynamic pricing economics efficiency Envision Utah equity eugene exclusive extension FAQ favela Federal Funding Flex Bus florida free fare zone freeways Frequent Transit Network frontrunner frontunner Gallivan garden cities gas prices geotagging goat Google grade-separation Granary District growth headway heavy rail hedonic High Speed Rail history housing housing affordability housing bubble housing prices HOV income infill innovative intersections intensity ITS junk science LA land use LEED legacy city light rail linear park location LRT lyft M/ART malls mapping maps market urbanism metrics metro MetroRail missoula mixed mixed traffic mixed-traffic mobile mode choice Mode Share multi-family MXD neighborhood networks news NIMBY office online op-ed open letter Operations parking parking meters peak travel pedestrian environment phasing Photomorphing planning Portland property property values Provo proximity quality_transit rail railvolution rant rapid rapid transit RDA real estate redevelopment reliability research retail Ridership ridesharing right of way roadway network ROW salt lake city san diego schedule schedule span seattle separated shuttle silver line single family SLC SLC transit master plan slums smartphone snow sprawl standing stop spacing streetcar streetscape streetscaping subdivision subsidy Sugarhouse Sugarhouse Streetcar Tacoma taxi technology tenure termini time-separation TOD townhouse traffic signal tram transit transit networks transit oriented development Transit Planning transponder transportation travel time TRAX trip planning trolley tunnel uber university of utah urban design urban economics urban land UTA UTA 2 Go Trip Planner utah Utah County Utah Transit Authority vmt walking distance web welfare transit Westside Connector WFRC wheelchairs zoning

Monday, February 6, 2017

Housing Affordability in SLC

"The consensus among real estate experts is that the recent expansion in housing supply has managed to keep DC area rents from spiraling out of control....December's year-over-year multifamily apartment rent growth in the DC metro region was 2.6 percent.....considerably lower than the national average of 4 percent.....attribute this to DC’s above-average multifamily housing stock growth rate (3.6 percent last year, compared to 2.4 percent nationally) has narrowly outpaced demand recently. - Greater Greater Washington.

Seems pretty clear to me. If rents are rising, supply is not meeting demand. SLC's rents are rising; We can't control demand; we can only control supply. There is strong market demand for housing, and the limit is regulatory. Relax regulatory limits, and increase supply.

I recognize no one wants a high-rise worth of buildings looking into their backyard. For owner-occupiers, their homes are their primary investment, and they are willing to fight to project that, which makes them politically powerful. So clearly some sort of buffering is going to be necessary. What that is going to look like is (broadly) hammered out: Two story buildings, over a half basement, with a total height of about 30'. The major conflict is over cars, and where to put them. On-street parking can accommodate 3 cars per 33' lot. Beyond that, off-street parking is required. How that is going to work out needs serious consideration as part of accessory dwelling units.

I'm opposed to efforts focuses on increasing the supply of owner-occupied housing. I rent, and I resent the implication that it means my housing preferences are inferior. It's also deeply inequitable: Providing a few more owner-occupied houses means a few more people are going to be able to 'win the lottery' by buying a home and sitting on it while it appreciates, without it doing anything to alter the fundamental dynamics of the housing market.

But relying on market solutions alone is not going to solve SLC's affordable housing problems. All the housing that is being added is being added on the higher end of the market. This is natural, and somewhat necessary--new construction requires higher rents. While that mitigates the tendency for mid-range apartments to be rehabbed and upgraded, it doesn't provide short-term relief for the low end of the rental market.

Market rate new construction requires high rents. So to provide low rents, a non-market intervention is required. SLC, as part of its homeless initiatives, is already engaging in this policy, at the low-income level. I'd like to see that extended further into the low-middle, and middle-income levels (50-80% of area median income).

As a long-term policy, a 'overbuild' in elevator apartments is appealing. Permit a very large number of high-rise apartments. Apartment construction is 'lumpy', and buildings 'package' units big bunches. Over-building is a expected characteristic of the development cycle; people start new projects until the financing runs out; the projects take a long time to complete, and my the time many hit the market, the increase in supply has caused rents to fall, and the projects are no longer profitable. Rather than competing with the private market at the peak of the cycle, the city should take over 'orphan projects' partially through the development process, and convert them to use as affordable housing. Denver's housing agency has done so with single family homes on a pretty successful basis.

To go even further, SLC could use public money to 'overbuild' the multi-family market after the development cycle has peaked. I'm less of a fan--the oversupply generates a 'hangover' effect that last decades, suppressing new market-rate multi-family development. I'd far prefer reducing market costs for new multi-family construction.

Finally, I'd like to suggest that the regulation most in need of attention is per-unit parking requirements. Parking is expensive, and mandating 2 stalls per unit seriously affects the affordability of a unit. There are increasing number of people in SLC that would be willing to make do with one less car (or no car) if that made rent cheaper. As a back of the envelope calculation, assume that a stall in a parking garage costs $40,000 to build. Using the 'building worth is 10 years of rent' ratio, that means a $40,000 bit of real estate is worth about $333 per month. I think many people would be willing to shed a car to reduce their rent by that much.

The immediate objection to such a policy would be the ease of violation: Deprived on on-site parking, people turn to on-street parking, and then overflow into near by areas, putting them in conflict with other users of on-street parking. Potential policy solutions include permitting reduced parking ratios only where on-street parking is metered for all nearby areas. For districts lacking meters, residents in the low-car or car-free units could be required to verify that they do not have a registered vehicle.