Why We Can’t Build Family-sized Apartments In North America

[Gantz]

Originally Posted by mhays

This is incorrect. (You're definitely not a developer!) Zoning and economics are very different in NYC vs. most places. For one, NYC gets a lot of narrow buildings due to a variety of factors generally not present elsewhere.

Most of it is due to cost and demand.
If all of a sudden you had demand for large apartment sizes in Pittsburgh, those buildings would get built. There is no point in building up inventory that is not in demand.

Case in point, those Jewish enclaves well outside of NYC, like Kiryas Joel, have large apartment sizes.

[Steely Dan]

Originally Posted by JManc

the vast majority of apartment complexes are soulless human filing cabinets surrounded by parking lots.

Ugh, the dreaded suburban garden-style apartment complex.

Preferably with those godawful '70s brown shingle mansard roofs.


The density of the city, with absolutely none of its locational/connectivity advantages!

Where do I sign up?

[Busy Bee]

Originally Posted by Crawford

More space, by itself, isn't a good measure of housing quality, especially past some minimum threshold of livability.

It sure isn't a measure of happiness. No doubt some of the most miserable people live in the biggest houses with the most stuff.

[mhays]

"Demand" is very different from "demand at a price that makes it work."

One-bedrooms tend to pencil. Three-bedrooms tend not to, except in the true luxury market. Building codes (and land use codes) are a big part of this. No question.

[Gantz]

Originally Posted by mhays

"Demand" is very different from "demand at a price that makes it work."

One-bedrooms tend to pencil. Three-bedrooms tend not to, except in the true luxury market. Building codes (and land use codes) are a big part of this. No question.

Because there is no demand.
80% of demand for apartments is coming from singles and DINKS. That is why 80% of the building is studios and 1br. (and some 2brs for households with 1 child).
3 bedrooms do pencil when there is demand (for example from Orthodox Jews). The orthodox Jewish apartment buildings are not "true luxury".

If you sell 3- 4- 5-brs to average American demographic, you'd have to sell them at discount per sq ft (compared to 1br) due to lack of demand, since most families with kids prefer SFHs.

[mhays]

You're confusing "less demand" and "demand at the right price" with "no demand." It's true that most American families want houses. But supply is clearly below the (unpriced) demand.

In fact it's why cities like mine give away substantial development bonuses for developers who provide bigger units, which allows the developers to offer them at far less cost. It's one of the main reasons my state just jumped on the missing-middle bandwagon. It's a big focus for our public housing dollars.

[Gantz]

Originally Posted by mhays

You're confusing "less demand" and "demand at the right price" with "no demand." It's true that most American families want houses. But supply is clearly below the (unpriced) demand.

In fact it's why cities like mine give away substantial development bonuses for developers who provide bigger units, which allows the developers to offer them at far less cost. It's one of the main reasons my state just jumped on the missing-middle bandwagon. It's a big focus for our public housing dollars.

If developers need subsidies to build bigger units, that just means there is no demand at market rate. Of course there is demand for below market rate housing, regardless of the type!

The reason is - large apartment units sell for the same price as SFH at market rates, so they have to be subsidized to compete with SFHs in markets where the demand for SFHs from people who can afford both is higher.

If you are a family that can afford a $700k apartment or a $700k house, most Americans, on average, pick the house. Simple as that. Studios and 1br cater to a different demographic at different price points (since houses typically have a limit on minimum sq footage that is bigger than studio apartments and offer different lifestyle).

Let me give an example:
A 1br at about 600 sq ft at $583/ft - $350K
A 3br at about 1,200 sq ft at $583/ft - $700K in the same building
A SFH at about 1,500 sq ft is also $700K in the same market/neighborhood
^You can see how an average American would either go for a 1br (if they are single or DINK) or a SFH.

[pj3000]

Originally Posted by Steely Dan

^ my wife and I are the worst kind of monsters.

Yeah, obviously

[giallo]

Apartment hunting in Seoul was interesting. Basically, it's bachelor or three bedrooms with very little in-between.

[Crawford]

Originally Posted by Gantz

Most of it is due to cost and demand.
If all of a sudden you had demand for large apartment sizes in Pittsburgh, those buildings would get built. There is no point in building up inventory that is not in demand.

Case in point, those Jewish enclaves well outside of NYC, like Kiryas Joel, have large apartment sizes.

KJ is basically an affordable Brooklyn satellite colony. And the Ultra-Orthodox have very different space/living requirements.

I agree, at least in "normal America" the big units don't generally have demand, but again, that's largely due to U.S. unique planning orientation, prioritizing SFH living, building exclusively driving environments, subsidizing gas, incentivizing low tax/low regulation environments, etc.

[dave8721]

Originally Posted by Steely Dan

Ugh, the dreaded suburban garden-style apartment complex.

Preferably with those godawful '70s brown shingle mansard roofs.


The density of the city, with absolutely none of its locational/connectivity advantages!

Where do I sign up?

Which is the reason why its the cheapest possible form of housing and is generally where most cities poor/immigrants live. Often with multi generational families crowded in to 1 or 2 bedroom units.

[mhays]

Originally Posted by Gantz

If developers need subsidies to build bigger units, that just means there is no demand at market rate. Of course there is demand for below market rate housing, regardless of the type!

The reason is - large apartment units sell for the same price as SFH at market rates, so they have to be subsidized to compete with SFHs in markets where the demand for SFHs from people who can afford both is higher.

If you are a family that can afford a $700k apartment or a $700k house, most Americans, on average, pick the house. Simple as that. Studios and 1br cater to a different demographic at different price points (since houses typically have a limit on minimum sq footage that is bigger than studio apartments and offer different lifestyle).

I have no idea why you're talking about typical Americans. The topic is the depth of demand among EVERYONE ELSE, plus those who wants to choose multifamily despite their own ideals.

[Gantz]

Originally Posted by mhays

I have no idea why you're talking about typical Americans. The topic is the depth of demand among EVERYONE ELSE, plus those who wants to choose multifamily despite their own ideals.

I don't understand. Of course we are talking about average Americans. The preference of the majority is why the market for large apartment units is fairly niche... Its a fairly specific real estate product with no strong demand. The market always tries to cater to whats in demand. No point in building otherwise unprofitable units.

[Obadno]

Quite frankly its jsut the supply and demand of land.

Why would you spend 5,000 a month on a 2000sqft 4 bed 2 bath apartments when you could spend 3200 a month on a mortgage for 3000sqft 5-bedroom house Wirth a yard and a garage with a 15-minute commute?

A lot of urbanistaa's don't like to acknowledge that there is a lot of basic cost benefit analysis that isn't in urban livings favor in the USA we just have TOO MUCH SPACE

The USA's overall population density is sooooooo low, we would need to triple our population to almost 1 billion to have the same pop density as Germany, Netherlands, Japan etc.

[Gantz]

Originally Posted by Crawford

KJ is basically an affordable Brooklyn satellite colony. And the Ultra-Orthodox have very different space/living requirements.

And that is why those units get built. If everyone else had the same demand for large multifamily units, the developers would've build them all over the place. The people who want to live in large apartments are in the minority.

I agree, at least in "normal America" the big units don't generally have demand, but again, that's largely due to U.S. unique planning orientation, prioritizing SFH living, building exclusively driving environments, subsidizing gas, incentivizing low tax/low regulation environments, etc.

America has plenty of land. No point in artificially constraining our housing supply to be like Europe or a country-wide San Francisco/NYC situation. People whine here about the cost of housing, but it is much worse in Europe. If you really wanted to simulate European housing situation, just live in a lawnmower storage shed.

[mhays]

Because in a country with 130 million households (guessing), even a niche can be a big opportunity.

Smart developers (and planners) don't just think about the size of a demographic. They think about the difference between the demographics and the necessary supply.

As for land, many regions have chosen to preserve farmland and forests, mine included. This is good, and important to our voters.

[JManc]

Originally Posted by mhays

"Surrounded by parking lots"!? The vast majority? I thought even in Houston a large percentage were in more urban form.

The new ones are and they are $$$ for most families but the older ones outnumber them 20:1.

[mhays]

Yikes.

[Gantz]

Originally Posted by mhays

Because in a country with 130 million households (guessing), even a niche can be a big opportunity.

Smart developers (and planners) don't just think about the size of a demographic. They think about the difference between the demographics and the necessary supply.

As for land, many regions have chosen to preserve farmland and forests, mine included. This is good, and important to our voters.

And those apartments do get built for that niche in markets where there is demand for them.
Smart developers always build what is the most profitable.
In NYC, I'd say about ~10% of the building envelope is devoted to large units, that is roughly how much demand there is and how much developers can sell. There are always exceptions of course.

[JManc]

Originally Posted by mhays

Yikes.

Consider the population and the socioeconomic make up of much if Houston; poor/ working class areas with very little new development other than a strip mall here and there. Inner Loop is getting lots of new/ dense development but out of reach for most people.