Housing: Data vs. Demand
Two separate housing-related stories have been lighting Twitter afire this week. Nationally, the American Planning Association released the results of a poll indicating that both Millennials and Boomers overwhelmingly prefer to live in walkable neighborhoods rather than auto-dependent suburbs. Locally, others have been discussing a multifamily housing boom through which nearly 20,000 units are under construction or set to break ground in Austin.
For me, at least, this leads to two basic questions: first, is Austin’s supposed ‘boom’ really a renaissance for multifamily housing here? And second, if all signs are truly pointing to a preference for close-in neighborhoods with urban amenities, why are we still building so many homes in far-flung ‘burbs?
As the Austin Business Journal pointed out in their article, 17,627 apartment and condo units are under construction in the region, and another 2,140 are set to begin work. That is certainly the greatest pace of development in more than a decade, and more than three times the number of units under construction at the start of 2011. But it seems we’re merely playing catch-up with the rapid population growth we’ve experienced as of late. According to the City of Austin’s website we added just over 75,000 residents between April 2010 and April 2014—this doesn’t even count growth in surrounding areas. Assuming an average 2.37 persons per household, that means those new residents would need more than 31,000 housing units. And as household sizes are expected to shrink, the number of units required to meet the demand of growth goes up.
Where will all those people go? Urbanists would certainly wish for most of that growth to occur in the city’s core neighborhoods; but, both local and national data still suggest they’re going elsewhere.
Here in metro Austin, permits were issued for construction of 9,240 single-family homes in 2013, with another 8,261 homes permitted the previous year. While I don’t have exact numbers, I’ll bet most of that construction occurred outside the city in nearby cities like Cedar Park, Elgin, Kyle, Lakeway, Leander, and Round Rock. Within Austin, over 5,000 multifamily units were completed in 2013. More than half of those—2,900 units—were outside of core neighborhoods, and the trend seems to be continuing into 2014 as well.
The nation’s top 10 builders—which include D.R. Horton, Pulte, and Lennar—closed on just under 89,000 homes across the country in 2012 (I couldn’t find 2013 data). I think we can assume nearly all of those are single-family detached homes in suburban subdivisions. Meanwhile, the top 10 multifamily developers added just 36,500 units in 2013. In fact, the National Association of Home Builders reported that construction starts of single-family homes in 2013 was more than double the rate of starts for multifamily units—618,000 versus 307,000.
So, if the largest chunk of our population wants to live in neighborhoods where they can walk to retail, entertainment, and quality transit, why are developers still building with a business-as-usual mentality?
The short answer: it’s easier to build sprawl.
Of course, it’s much more complicated than simply assuming developers are lazy (it sure is easy for NIMBYs to blame them, though!). After all, any developer who attempts to build anything other than a grouping of tract homes or garden-style apartments will likely run into a host of roadblocks. Land use regulations, zoning, lending practices, and deep-rooted beliefs about the American Dream all contribute to maintaining sixty years of suburban status quo.
Cities continue to require the provision of parking at rates that effectively outlaw dense housing in established neighborhoods. Banks and investors continue to favor “proven” development models with minimal risks and high returns on investment. Inner-city public schools continue to lag behind suburban schools. And perhaps most forgotten is that our tax dollars heavily subsidize sprawl, making it easy for most people to justify the habit of car-dependence (yes, research is now calling it a habit).
Ultimately, people have to live somewhere. And if somewhere is the suburbs, builders equate this as demand for suburban living, fueling the cycle of sprawl. And, the results have been frustrating at best. Here in Austin, at least, long-time residents are resentful of newcomers, complaining that they’re clogging our roads and bringing long lines to our restaurants. Drought conditions are made worse by the immense demand placed on our water resources to keep grass green. Flash flooding from the rains we do get is worsened as we continue to pave our hinterlands. Housing prices in desirable central neighborhoods are getting ever-inflated due to high demand but low incoming supply. The list goes on.
How do we get this contingent of Austinites—and Americans—into the neighborhoods where they would rather live? Or yet, make their neighborhoods better reflect their preferences?
- Charge the real costs of suburban living.
- Impact fees should be tied to the true cost of extending infrastructure to far-out neighborhoods; this not only includes utilities and roads, but extending fire and police services as well as schools
- Property taxes should not only be calculated on square footage of land and improvements, but on the length of infrastructure (utilities and roads) needed to service each property
- Transition from a gas tax to a vehicle miles traveled tax to maintain existing roadways and encourage more transit use
- Set utility base costs to truly encourage conservation—thus, fees are not flat rates but based on usage
- Encourage density in core neighborhoods.
- Allow secondary apartments to be built by-right on all single-family properties without requiring additional parking where it is not warranted due to transit accessibility or walkability
- Actively promote intensification of land use over existing parking
- Remove building height limits, density limits and parking minimums along transit corridors
- Consider allowing properties with alley access to be subdivided to allow fee-simple ownership of alley-accessible properties
- Develop high-frequency transit that serves urban neighborhoods first before expanding into outlying areas
- Actively promote the demolition of so-called urban freeways to return the property back to the community—and the city’s tax base
- Reduce minimum unit sizes to allow the development of micro apartments
- Remove barriers to financing urban development.
- Align eligibility for condominium mortgages more closely with those for single-family home purchases
- Require banks that offer mortgage products to allow development of secondary units
- Develop a consistent process for assessing the added value of secondary units
- Incentivize commercial property owners for leasing vacant retail space to short-term (“pop-up”) tenants
- Reinvest in inner-city schools.
- Reduce reliance on standardized test scores as a measure of school quality
- Ensure that school boundaries and per-student funding reflect social justice rather than encourage wealthier families to flee to “better” school districts
- Promote grassroots efforts to bolster confidence and performance of lower-performing students, such as through mentoring, job shadowing, tutoring, pre-college programming, and increased access to healthcare and healthy foods
The above list is, by no means, comprehensive. What do you think?