THIS is how you get truly affordable market-rate housing in an expensive city

[mhays]

I meant in the past, and much of the current inventory. College-owned housing is now part of attracting students and I agree it's often larger, including individual rooms. The UW for example has torn down and replaced thousands of beds for that reason.

Off-campus private student housing is also often in the format you describe, except I mostly see ratios like 2:4 bathroom:bedroom, and many bedrooms come with bathrooms.

Here's one with a mix of both (see p 28-29 etc.): https://web.seattle.gov/dpd/edms/Get...nt?id=10325731. Alas, this isn't moving toward construction very quickly, though the U District has added several of these towers lately.

[raggedy13]

I'm not so sure smaller units is a real solution to housing affordability - definitely not for your average family - but it does at least offer up more options that didn't previously exist and so might suit the needs of some people.

I'm hoping the more successful trend is moving towards abolishing single-family zoning in favour of more, smaller-scale multi-unit housing, like multiplexes. British Columbia recently mandated this province-wide through new legislation (at the end of 2023). It's a bit too soon to say how this will impact things since cities are still implementing the zoning and it will take awhile before the first batch are built and occupied, etc., but it seems Auckland had some success with this approach:

• Video Link

[mhays]

Micros will typically be cheaper and more central than ADUs or townhouses.

Washington has also mandated four-plex and six-plex zoning in SFR areas for any larger city/suburb at the state level, which is currently being rewritten into local codes. We'll see what results in each jurisdiction, since the code details are a big factor.

Previously, Seattle legalized two accessory units along with most SFRs (three total), and those ADUs have to be smallish (not like micros), and last year had 984 permitted, vs. two digits annually until 2010 and 284 in 2019. (Many that are permitted don't get built, because a lot of people end up surprised at the costs.)

Micros are for people who can't quite afford either -- typically singles working low-wage service jobs, retirees on small incomes, etc.

[MonkeyRonin]

SROs are a piece of the affordability puzzle, but on their own do not guarantee that there will be an affordable option. In a distorted market where demand greatly exceeds supply, the price is determined not by what the housing unit cost to build, but by the maximum price that prospective residents are willing to pay to not be homeless. That price is determined moreso by what local wages can support than by whether those units are 100sqft or 500sqft.

More housing options at different sizes & typologies is a good thing; but a deeply unaffordable market behaves in dysfunctional ways, and if a disproportionate share of new housing is also coming in the form of small units, you run the risk of inflating larger housing types that subsequently become proportionately rarer.



You get affordable market-rate housing at all levels by some mix of:

-Reducing regulations and restrictions on housing construction in general. This means liberalizing zoning bylaws to allow higher densities, accessory dwellings, etc. everywhere (if limited only to certain neighbourhoods or cities it just boosts property values in those jurisdictions) and reducing restrictions on outward growth; loosening form or size-based requirements (eg. allowing SROs/micros); simplifying & streamlining permitting & approvals processes; reducing development charges; and even loosening building code requirements (recent code changes in some places have added greatly to construction costs without necessarily improving safety or livability for occupants).

-Government-backed financing, loans, and incentives for builders to construct market rate rentals.

-Discouraging speculation and commodification of real estate as an investment, through tax levers and other legal means (eg. restrictions on foreign buyers, short-term rentals, shifting tax burdens from income to property, etc).

-Ensuring that population growth targets are coordinated and set to a level that the housing market can absorb (this is more an issue in smaller countries like Canada where most growth is coming from immigration. Less a factor in the US where there's larger volumes of internal migration that can't really be controlled for).

[harls]

In my city, they are setting up shipping containers to tackle the homeless encampment currently next door.

https://www.gatineau.ca/upload/avis_..._carillion.pdf

(pgs 8-10)

[lio45]

Originally Posted by harls

In my city, they are setting up shipping containers to tackle the homeless encampment currently next door.

https://www.gatineau.ca/upload/avis_..._carillion.pdf

(pgs 8-10)

I'm seriously considering offering the municipal council here the idea of putting a bunch of shipping containers on one of my downtown lots to create a concentrated homeless "city". I mean, that's of course not compliant with the current rules (per the rules all I can do there is build a real building, a pile of shipping containers doesn't qualify), but it might be better overall than the alternative (which is, homeless people everywhere with tents and under bridges).

Curious to see how the idea would be received. At least now I can point out to a real-life example in another Quebec city!

[mhays]

Originally Posted by MonkeyRonin

SROs are a piece of the affordability puzzle, but on their own do not guarantee that there will be an affordable option. In a distorted market where demand greatly exceeds supply, the price is determined not by what the housing unit cost to build, but by the maximum price that prospective residents are willing to pay to not be homeless. That price is determined moreso by what local wages can support than by whether those units are 100sqft or 500sqft.

More housing options at different sizes & typologies is a good thing; but a deeply unaffordable market behaves in dysfunctional ways, and if a disproportionate share of new housing is also coming in the form of small units, you run the risk of inflating larger housing types that subsequently become proportionately rarer.



You get affordable market-rate housing at all levels by some mix of:

-Reducing regulations and restrictions on housing construction in general. This means liberalizing zoning bylaws to allow higher densities, accessory dwellings, etc. everywhere (if limited only to certain neighbourhoods or cities it just boosts property values in those jurisdictions) and reducing restrictions on outward growth; loosening form or size-based requirements (eg. allowing SROs/micros); simplifying & streamlining permitting & approvals processes; reducing development charges; and even loosening building code requirements (recent code changes in some places have added greatly to construction costs without necessarily improving safety or livability for occupants).

-Government-backed financing, loans, and incentives for builders to construct market rate rentals.

-Discouraging speculation and commodification of real estate as an investment, through tax levers and other legal means (eg. restrictions on foreign buyers, short-term rentals, shifting tax burdens from income to property, etc).

-Ensuring that population growth targets are coordinated and set to a level that the housing market can absorb (this is more an issue in smaller countries like Canada where most growth is coming from immigration. Less a factor in the US where there's larger volumes of internal migration that can't really be controlled for).

I agree that reducing restrictions on housing construction would be the biggest boost to affordability. (Infill, not sprawl, which is both destructive and needy in terms of new infrastructure)

One great thing about micro housing is it doesn't take much land. You can put 50 units on a single bungalow lot of 5,000 sf. Combine that with micros being a small fraction of what the market wants/needs (a few percent of the housing stock?) and it's not getting in the way of other types.

That's assuming you have a lot of land zoned for multifamily. Micros in Seattle are almost universally woodframe on small lots. I don't know the whole equation but that's where the math tends to work (one reason is that woodframes are built by non-union contractors here, but it's more than that). Vancouver and Toronto (that "distorted market") might need more 6- or 8-story zoning and easier rules for woodframe construction like we have.

[MolsonExport]

Originally Posted by harls

In my city, they are setting up shipping containers to tackle the homeless encampment currently next door.

https://www.gatineau.ca/upload/avis_..._carillion.pdf

(pgs 8-10)

I saw a lot of this when I was last in Germany, visiting Hamburg and Berlin.

[mhays]

Based on typical "20 foot" TEUs, those have internal dimensions of 19.4' long, 7.8' wide, 7.9' tall. That's 151.32 sf...in theory.

Subtract insulation added on the inside of exterior walls plus any partitions and it would be a little under that.

I wonder if they combine a few TEUs to make larger units in many cases.

US codes seem to make these harder to make work, hence the relative rarity of them for apartments. They require surprising amounts of money. You could say they're only replacing studs and drywall really...not much of the total cost of a building, and they involve costs to retrofit the containers.

[edale]

So these tiny units have their place, for sure. I think that's what we should be building for homeless people to get them off the streets. Bring those 100% affordable housing development costs down and build a lot of them. Here in LA, we build damn near luxury housing for the homeless at a cost of like $750k per unit and we wonder why we can't build enough of them.

I reject the idea that these micro units are suitable for average working people, though. It's pretty dystopian to say to someone who works full time that the only way they can afford a place of their own is if they live in a little shoebox and have to share a kitchen and bathroom with strangers. When previous generations could buy a house with a yard for basically a song, to now tout that future generations are destined to live in 70 sq ft boxes doesn't seem like much to celebrate. It's like saying we've solved world hunger and the solution is that everyone now has to eat bugs. Thanks but no thanks.

[mhays]

Many people are in the gray area between the street and a larger apartment. Micros can fill that gap for some people.

Service salaries should be higher, agreed. However lower-end service wages have never been enough for even a cheap normal-sized apartment in a growing city. That's why people often had roommates even in the 80s and 90s (as I did). It's why SRO housing was popular even among working people until fire codes etc. caused a lot of them to be torn down in the 70s.

Why is this? For starters, it costs a lot of money to build housing. It's impossible to build truly affordable normal-sized apartments in many cities, period, unless there's a massive subsidy. We need some market-based solutions and micros are a part of that.

The smallest micros aren't going to pull you in if that's not your preference. The point is that now people can choose them if they want to, or can't afford anything else.

In a free country, should people not have that option? Should we also outlaw the new trend of living in a 50 sf trailer, or a 100 sf two-person dorm?

[Xelebes]

In Canada, we built a lot of micros. They're not that affordable and they mostly sit empty. They're really only useful for transient life if at all.

The big reality is that there has been relative stagnation in productivity, especially in the construction industry. Part of it is building codes, part of it is zoning, part of it is simply the lack of capital investment to make the construction industry more effective.

In broader economic terms, a significant part of the solution is the need to throw energy not human power to build and maintain cities. Relying on human power is never going to make things more affordable.

[mhays]

"They're not affordable and most sit empty"? I find this hard to believe if you're referring to apartments in expensive cities. Do you have data or context on this?

[lio45]

Originally Posted by mhays

"They're not affordable and most sit empty"? I find this hard to believe if you're referring to apartments in expensive cities. Do you have data or context on this?

The context is real estate as glass-and-steel bitcoin, specuvestors often prefer not to bother with tenants, leases, and all that crap. The general idea is, buy for $x, sell for ~$1.5x to some sucker in the future, and the (negligible) negative cash flow in the meantime is just part of the deal (traded off for the relief of not having to be a landlord).

I have converted some buildings to surface parking, I have converted some buildings to vacant land, and I have converted some SRO buildings to empty shells for the time being (one I'll likely demolish, the other I would ideally turn into college student housing). I can say from personal experience that even though the cash flow is of course lower than back when I had buildings and tenants in those locations, the ratio "amount of effort over time that I need to devote to owning those properties"/"potential long term benefits of rising real estate values" is actually much better without tenants. This way I'm free to focus on more interesting projects, while continuing to fully enjoy the main benefit of ownership (namely, rising land values).

[mhays]

That sounds like old buildings in disrepair, not functional buildings and certainly not new ones.

[lio45]

But the core concept is the same: the cashflow from tenants isn't the point. Higher future property values, is.

That's why plenty of property owners don't even bother with tenants, the obvious outcome of this being empty units, as noted by Xelebes.

Some cities even introduced financial penalties for those who insist on keeping their units vacant. Just google "Paris Vacant Home Tax" if you don't want to take my word for it.

[mhays]

I'm familiar with the concept. It just doesn't apply to new micros, or any modern-era apartment building that doesn't need major work and isn't under rent control.

Micros tend to rent for high $/sf in my area. That's why we got a surge of them via the pre-2014 loophole, and why we should get another surge now.

[MonkeyRonin]

Originally Posted by mhays

I'm familiar with the concept.  It just doesn't apply to new micros, or any modern-era apartment building that doesn't need major work and isn't under rent control.

Micros tend to rent for high $/sf in my area.  That's why we got a surge of them via the pre-2014 loophole, and why we should get another surge now.

Out of curiosity, how have those micros impacted the market in Seattle? Have they created a cheaper option that didn't exist before? Have rents for larger apartments risen as they now comprise a smaller share of the housing stock? Or have rents for all housing types dropped or stagnated as a result of increased supply & choice?  

The higher return on rent per sqft is a great reason to build them, but also the primary concern in imbalanced, high-demand/low-supply markets: builders tend to like to maximize their profit, so will build what is most profitable, to the detriment of everything else. This is basically what's happened with the condo market in places like Toronto - the greatest return was found in building small 1bed/studio units, so that's what flooded the market. As a result, price growth has been the slowest (and is now actually negative) in this segment of the market - which is good; but prices for anything larger have exploded and continue to rise. Perhaps we'll reach that equilibrium point where it becomes more profitable to build 2/3-bedroom units soon; but as of right now it's tough to find any form of housing that isn't a tiny apartment.

A healthy city isn't just about maximizing rentable square footage though - it needs a variety of housing types & sizes to suit a variety of users, needs, and budgets - which micros are absolutely a part of, but cannot be the sole solution to. Which is why construction restrictions need to be heavily curtailed across the board - by making it easier to build all forms of new housing so that the market can respond more wholly to the range of demand.

[mhays]

The market and land use codes make three-bed units hard.

Three-bedroom units basically require small or narrow floorplates, because four rooms need windows. Developers prefer thicker floorplates because they're more efficient in cost/risk/return, and most zoning allows them. One-bedrooms and studios work well with thick floorplates, with units deeper than they are wide (only they can cost-effectively rent space far from windows). This is why we get mostly that type of unit.

Even when a three-bed unit is possible, like where a small floorplate offers multiple sides to that unit, the rent per square foot tends to be lower. People won't pay twice as much on average for a unit that's twice as large. (Stats can be misleading...the three-bed units that do rent are often in luxury buildings, skewing averges.)

Micros need thin buildings too. But unlike three-bed units, they rent for a lot per square foot. Rent levels are often a function of door + square footage, with the door being worth a lot by itself. So it can be worth it to go narrow even if allowed to go wider.

Despite all that, micros tend not to be built in highrise areas or on large sites. They tend to be on the fringes of denser districts, on single former house lots with setbacks on the sides. They can be 30 feet wide with units on both sides of a hallway.

I can't speak to the effects on rents for other types of units. The first reason is that rents are the result of countless factors (though the biggest would be replacement cost, based on development costs, which have skyrocketed). Also I no longer pay for the best data. Seattle has built a lot of units overall, including a lot of "sorta micros" in the 280 sf range, and rents have been flat for a few years.

[MonkeyRonin]

Originally Posted by mhays

The market and land use codes make three-bed units hard.

Three-bedroom units basically require small or narrow floorplates, because four rooms need windows. Developers prefer thicker floorplates because they're more efficient in cost/risk/return, and most zoning allows them. One-bedrooms and studios work well with thick floorplates, with units deeper than they are wide (only they can cost-effectively rent space far from windows). This is why we get mostly that type of unit.

Even when a three-bed unit is possible, like where a small floorplate offers multiple sides to that unit, the rent per square foot tends to be lower. People won't pay twice as much on average for a unit that's twice as large. (Stats can be misleading...the three-bed units that do rent are often in luxury buildings, skewing averges.)

Micros need thin buildings too. But unlike three-bed units, they rent for a lot per square foot. Rent levels are often a function of door + square footage, with the door being worth a lot by itself. So it can be worth it to go narrow even if allowed to go wider.

Despite all that, micros tend not to be built in highrise areas or on large sites. They tend to be on the fringes of denser districts, on single former house lots with setbacks on the sides. They can be 30 feet wide with units on both sides of a hallway.

For those reasons, multi-bedroom housing in general is better suited to missing middle type forms, like townhouses & low-rise smaller footprints. Micros as well, given the small floorplates. These types of builds are also usually cheaper to build on a PSF basis than high rises (and also really easy to build in modular format).

I mostly see our current predilection towards towers (moreso a Canadian issue) as a failure of land use policy; as in a freer market it would be far more efficient to build at smaller scales, if not for zoning constraints and resultant land values.

Originally Posted by mhays

I can't speak to the effects on rents for other types of units. The first reason is that rents are the result of countless factors (though the biggest would be replacement cost, based on development costs, which have skyrocketed). Also I no longer pay for the best data. Seattle has built a lot of units overall, including a lot of "sorta micros" in the 280 sf range, and rents have been flat for a few years.

You're right of course - it's impossible to say what the impact as been without a whole bunch of research. The fact that Seattle's rents have been flat over the last few years is certainly promising though, particularly as they've continued to rise in other big cities.

Anyway, all this is to say that I for one do welcome more micros & SROs (just also more other stuff).