> The Terner Center study on the cost to build low-income housing found that projects paying union-level wages to construction workers could cost $50,000 more per apartment and those built to stricter environmental standards cost $17,000 more per apartment than those that aren’t.
$1m per apartment. So let’s talk about the cost drivers driving 5% and 1.7% of those costs. Just… wat? Let’s start examining the warts on the rhino charging at you?
Also, if your plan to lower the cost of affordable housing is to pay the people who need affordable housing less then I have bad news…
Particularly egregious given that they ignore the Terner Center Study's main finding, which is that the #1 predictor of the cost efficiency of housing is density. If you want cheaper housing, build it more densely. Whether it's union construction or not is a rounding error.
This reads to me to be either deliberately anti-labor or someone who didn't want to make the obvious but hard to fix point in favor or making a divisive and clickbaity one.
Did you not read the entire article.. They say one of the largest drivers is trying to navigate the bureaucracy and red tape...
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A 2018 study by the U.S. Government Accountability Office found that 14% of the price tag for California’s affordable housing projects was made up of consulting fees and other administrative costs — the highest in the country and more than developers spend on land.
They don't want to address the real cost: the building codes being ridiculous. That would require reducing the amount of regulation. These codes have real cost and they don't necessarily add a lot of quality-of-life for the occupants.
Edit - it was pointed out in another thread that affordable housing has to go through the same ridiculous permitting and environmental bureaucracy as other housing. That also costs a ton, probably more than the crazy building codes.
I was looking at a home with property on the central coast, inland a bit. The gentleman had spent the last 20 years building his own little subdivision. He had 10 or so homesites of 1 acre with modular homes on poured foundations. He told me that he would never do it over again. He told me a story about how he was required by law to build an affordable unit for every however many traditional units, so he had to build one. The problem was that the county also said that the maximum acreage for an affordable unit was .5 acres, but the minimum acreage for a septic system was 1 acre. There is no overlap in that venn diagram. So he was stuck there for a while, then the local government organized a meet and greet where he could meet the folks in local government in that county and tell them his troubles with getting his subdivision built. The guy in charge of the affordable housing laws was on one side of him at the table, the septic guy on the other. In that moment each of those men discovered that the venn diagrams did not overlap. Those two functions of government had never talked, and didn't even known that their regulations were mutually exclusive.
He said it was a lot of that kind of stuff.
What I learned from that whole interaction- don't develop property in California.
I worked in the industry for 7 years in California. A big part of it is a race to the "top". If you want to be competitive in winning funding from the 5 or 6 different state/local/federal programs that need to be cobbled together to build a new project, you have to make all of them happy. That means then highest possible LEED certification, on-site resources like computer labs and childcare facilities, plenty of green space, public art, and of course ample parking. That's all above and beyond that already high standards of CA building codes (which, let's not forget, also includes being earthquake-resistant).
Most of the new projects I worked on were very nice. Several had community pools. Most had balconies/patios. Most were well connected to transit (a biggie if you want to be competitive with the funding agencies). Virtually all were mixed income and housed families ranging from below the poverty line to 6-figure incomes. I would have happily lived in most of those complexes if they had been geographically desirable, but most were less urban than I prefer. Though I may still be on the waitlist for one particularly well-located building in SF!
Single rooms, and from the very short description, apparently no running water?
> Each room will have a bed, a desk and chair, heating and air conditioning, a window, and most importantly a door that locks.
This is a very special purpose shelter apparently. It's not something I've ever heard of before, but seems to be simply a building full of what most middle class homeowners might describe as "walk-in closets" -- big enough for someone who is otherwise homeless to crash in for the night.
And as you say, by bypassing basically every possible regulation that might have applied to a typical "residence", the baseline construction cost of these 31 "walk-in closets" is indeed fairly low.
There are comments here about what "affordable" should mean in the US.
I have two kids (1 boy and 1 girl, one special needs) and we live in a two bedroom (850sqft) with the living room doubling as our bedroom so the kids get rooms.
When I go visit friends or family that have 3/4/5 bedrooms it feels like a mansion, so I guess what's normal is a function of what you are used to. I will say that the challenges that come from living this small are very different from what my friends and family talk about.
This is in SoCal for location reference, and I WFH.
I know it doesn't make you feel any better but that size of a home for family of 4 in Europe would be absolutely normal.
For me it sounds like the topic is not even about "affordable housing" here anymore.
If we estimate something like $35k (the poverty line in California) then each affordable house costs twenty eight years of poverty line income; maybe it'd be cheaper to pay them to move far away.
Yes, there are obvious problems with this, but the scale is getting out of hand.
Honestly if it weren’t so depressing I’d enjoy the schadenfreude of watching Californians sacrifice one sacred cow - science (economics), for another - their social mores.
I’m constantly amazed by my friends who can get into the minutiae of Covid epidemiology or climate science, can’t or won’t embrace the most rudimentary economic concepts and principles because it conflicts with their social beliefs
I generally find that when I look into it the 'crazy, communist, californians' are doing stuff that even right-wing parties in Europe take for granted as being a basic part of modern civilization, because its what the relevant experts in the field recommend, so I wouldn't hold my breath waiting for California to collapse into anarchy.
This is just a slightly less fanciful trope than the "being nice to gays causes hurricanes" thing. You can tell its not actually believed for similar reasons.
If being nice to gay people actually caused hurricanes there's all sorts of useful information we could glean from that and use to make the world better, to fix droughts for example.
But the meteorologists weren't the one that noticed this surprising link, were they? It was the people who don't like gay people who spotted it.
Similarly, if there was actual useful information about how progressive policy X was bad for progressive goal Z, then people would want to know that information and use it. But weirdly, it's the non-progressives who have all these reasons why progressive stuff is bad for progressives.
So you're left in a climate change denial type situation where you need to believe that the whole of academia and government around the world is in cahoots to cover up the truth for unclear reasons.
"They're killing all the birds to make expensive unreliable energy and climate change isn't even real!" Well the bird experts, economists, climate and energy folk all think you're wrong but don't let that stop you.
conveniently, they leave out the #1 cause of high construction price. Lack of density. Residential construction gets cheaper the more of it you build in an area. It's possible this is not a popular notion amoung the readers of this article and that's why it was left out but it is in fact the main conclusion of the Terner Center study that they cited.
Can they not spend $1.5 million per unit to build luxury housing and then allow the old luxury housing to become affordable? This kind of economics has worked in the past for housing when we built a lot more units, and it's kind of the natural lifecycle of a building.
The dirty secret is that "affordable housing" is usually a certain number of "dwelling units" in a new development (think apartment building) and so they dump as much as possible of the entire cost of the building into the cost for the "affordable units".
If I am building a building with 50 high-end condos, I won't bother making cheaper ones for my affordable units, I'll just designate some as affordable and maybe skimp on the trimmings, but even then probably not much because of the hassle.
The problem is that when people are suffering now, they don’t want to be told to wait a decade or two for current luxury housing stock to filter down and become affordable. Just imagine closing a local food bank and replacing it with a vague promise that the local grocery store prices will improve. How well is that going to go over?
Long term, we do need more market rate (“luxury”) housing stock. But they cannot be instead of trying to help people who need it now
Some places do social housing where they rent a fraction of the units to upper income individuals to subsidize the rest. However in the US funding sources generally have rules that say the units can only be rented to households making less than X% of the area median income. Which isn’t necessarily a bad thing: even in a properly functioning housing market there are going to be some people who cannot afford mark rate housing, and the assumption is that everyone else will rent market rate units
Housing construction costs are a nonsensical number to look at. If I’m going to build and sell a 2 million dollar property, I’m not going to spend 100k building a tiny home.
Developers need to compete at this price point, the cost of construction is probably a loosely linear function of land value. Land value has been inflated by a puzzling combination of NIMBYs, interest rates, and economic growth.
Everybody wants "affordable housing" - but many do not want more people. This is the fundamental disconnect. Many folks just do not want to make it any easier for more people to move in. They would like rents/prices to be lower though.
This is how we end up with rent control and tight building restrictions - because it solves both problems. Roll up the drawbridge against new people by blocking development, but then make the housing affordable by fiat.
The only remaining problem then is 10 year waitlists to get into one of those rent controlled spaces. Bummer on that...
Many people do want more people because global populations have been continuously centralizing. Cities have become more dense and rural towns have drained out. People have made this choice on their own.
> will offer two-, three- and four-bedroom apartments for between $1,186 and $2,805 a month
Honest question: why does affordable housing needs to be 3 or 4 bedroom? Shouldn't they be mostly Studio and 1-bedroom apartments, and at most, 2-bedroom, that too rarely?
4-bedroom sounds like a luxury apartment and not an affordable apartment.
>Shouldn't they be mostly Studio and 1-bedroom apartments
No. It's not an intuitive result, but it makes sense when you think about it. Bedrooms are cheap to build. Kitchens and bathrooms are expensive to build. Building 3 units with a total of 3 bedroom, 3 kitchens, and 3 bathrooms is a much less efficient setup than building a 3 bedroom 2 bathroom unit. If you incentivize people to have roomates or co-habitate with extended family by building bigger suites you can make housing cheaper overall.
More bedrooms means the apartment can house more people. While the entire unit is more expensive, it’s probably cheaper per-bedroom. A four-bedroom affordable housing unit could be occupied by a multi-generational household, or maybe a bunch of young adult friends.
According to the USICH [1] there are 271,528 students experiencing homelessness in California. Presumably some of these students would benefit from living in units like these.
it's single-bed apartments that are the luxury. who do you know that lives alone except single young professionals? everyone else has family or roommates.
Luxury relative to what, exactly? I think people in America are generally accustomed to one-bedroom-per-child; that's the standard our popular media promotes. I grew up in a family of 5 with a 3 bedroom house; meaning two of us were always sharing a bedroom even as teenagers (we switched up who was sharing every year, meaning none of us had a fixed bedroom.) I think by American standards that was not entirely atypical, but certainly short of luxurious. But you seem to think 3 bedrooms qualifies as luxurious, and don't seem to make any consideration for family size.
In some countries, cultures or communities, a family of ten might be living in a single bedroom. Maybe anything more spacious than that should be your standard for luxury. Or further maybe; any shelter that keeps you dry is the bare minimum. If it keeps you dry and warm, that's luxury. Why not? If you get chilly you can use a blanket; furnaces are luxury. Do you really need anything more than a primitive FEMA tent? Running water plumbed straight into your home is a luxury, you can bring a water bucket to a community spigot every day. If you think that's too much work you're just being entitled.
Anecdata from a number of friends in NYC: the mafia controlling much of the market on glass (windows) and other construction materials, along with union jobs costing a premium… with YoY increases because they can, is driving prices much higher than where they should be.
Has there been research on subsidized apartments versus paying people the difference and letting them choose where to live? Rather than applying for a subsidized apartment, apply for a $1k-$2k/month rent subsidy from the government and live in market rate units.
Rent subsidy is always better than affordable housing. The government should buy land and lease it out to raise revenue. At some point we can extend it to more people and call it a citizen's dividend.
Just a thought: Why not pay the fly-over states to build new housing ($128,868 on average for a new 1,200 sq ft home in Iowa [1]), to accommodate "low-income Californians"? You could tie the expatriate home subsidies to online jobs in California, and reduce your costs to less than 13% of what they are now. Many communities in Iowa have gigabit residential optical Internet, and the cost of living is substantially less than California. It could be great for both the economies of California and Iowa (or wherever).
A $1M house would cost someone about $5,800 per month just to pay a 30 year mortgage at current rates without a down payment and that excludes property taxes, insurance, utilities, repairs, and all the other minor costs that go along with ownership. How can anyone possibly expect to be profitable in the slightest building that housing. Not even luxury housing would be doable at that price. The only return these investors get is from hoping the cost of the property goes up in 10, 20, 30 years, not from the income generated from rent. Companies actually refuse to build in California because what happens when the anti-landlord, anti-profit government decides they don't even deserve enough in rent to stay afloat until they reach those breakeven years 20 years later. The government implements rent control, decides that tenants don't have to pay, decides that tenants can't be evicted if they don't pay, and decides you are the bad guy for being a landlord, or that you are gentrifying the area. There is this assumption some government grant or combination of 5 of them should be the incentive to build there. Why not just allow those properties to actually be profitable an build there - then they would build more housing? Housing built to be affordable housing and those built to be luxury aren't even that different in building costs but you only get incentives if you build the affordable housing. 1000 new units at the top end still increasing overall housing by 1000 units. Instead they incentivize building 1000 units at the bottom end. Why not have the developers actually be the good guys, the hero's that are coming to build housing, sure at their profit but refusing to allow people to become profitable landlords is like saying we don't want more doctors in the world because doctors make too much money. There is an obvious need right now and they sacrifice the entire housing market in order to 'help the poor' but in the end it's a sacrifice. any economist knows that implement pricing controls (like affordable housing) only causes shortages. You have reduced supply because no one wants to build anymore, You have increased demand because everyone wants to pay that lower price. Pricing controls are the biggest disaster in the country and have probably caused more homelessness in their desire to lower prices.
Clearly California should form a committee to require developments containing affordable housing to submit construction cost impact reports, subject to public review and committee approval.
Any mature and great resident area would be expensive. With network and mostly work at home may be it helps. Otherwise look around it is always expansive for city cf rural … I am not sure there is a solution. When the house value comes down … it is more trouble.
[+] [-] SilverBirch|3 years ago|reply
$1m per apartment. So let’s talk about the cost drivers driving 5% and 1.7% of those costs. Just… wat? Let’s start examining the warts on the rhino charging at you?
Also, if your plan to lower the cost of affordable housing is to pay the people who need affordable housing less then I have bad news…
[+] [-] idiotsecant|3 years ago|reply
This reads to me to be either deliberately anti-labor or someone who didn't want to make the obvious but hard to fix point in favor or making a divisive and clickbaity one.
[+] [-] _Parfait_|3 years ago|reply
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A 2018 study by the U.S. Government Accountability Office found that 14% of the price tag for California’s affordable housing projects was made up of consulting fees and other administrative costs — the highest in the country and more than developers spend on land.
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[+] [-] pclmulqdq|3 years ago|reply
Edit - it was pointed out in another thread that affordable housing has to go through the same ridiculous permitting and environmental bureaucracy as other housing. That also costs a ton, probably more than the crazy building codes.
[+] [-] mwint|3 years ago|reply
[+] [-] NackerHughes|3 years ago|reply
[+] [-] iancmceachern|3 years ago|reply
He said it was a lot of that kind of stuff.
What I learned from that whole interaction- don't develop property in California.
[+] [-] chii|3 years ago|reply
turns out that even in real life, the problem of a company writing internal, incompatible APIs exists.
[+] [-] standardUser|3 years ago|reply
Most of the new projects I worked on were very nice. Several had community pools. Most had balconies/patios. Most were well connected to transit (a biggie if you want to be competitive with the funding agencies). Virtually all were mixed income and housed families ranging from below the poverty line to 6-figure incomes. I would have happily lived in most of those complexes if they had been geographically desirable, but most were less urban than I prefer. Though I may still be on the waitlist for one particularly well-located building in SF!
[+] [-] voz_|3 years ago|reply
In SF, thats the same thing man.
[+] [-] stevesearer|3 years ago|reply
https://dignitymoves.org/santa-barbara/
From what I can tell, the it city and county just went for using emergency rules and bypassed most planning rules (it is on county land).
Will be interested to see how it works out.
[+] [-] zaroth|3 years ago|reply
> Each room will have a bed, a desk and chair, heating and air conditioning, a window, and most importantly a door that locks.
This is a very special purpose shelter apparently. It's not something I've ever heard of before, but seems to be simply a building full of what most middle class homeowners might describe as "walk-in closets" -- big enough for someone who is otherwise homeless to crash in for the night.
And as you say, by bypassing basically every possible regulation that might have applied to a typical "residence", the baseline construction cost of these 31 "walk-in closets" is indeed fairly low.
[+] [-] CobaltFire|3 years ago|reply
I have two kids (1 boy and 1 girl, one special needs) and we live in a two bedroom (850sqft) with the living room doubling as our bedroom so the kids get rooms.
When I go visit friends or family that have 3/4/5 bedrooms it feels like a mansion, so I guess what's normal is a function of what you are used to. I will say that the challenges that come from living this small are very different from what my friends and family talk about.
This is in SoCal for location reference, and I WFH.
[+] [-] Dma54rhs|3 years ago|reply
[+] [-] oneoff786|3 years ago|reply
[+] [-] bombcar|3 years ago|reply
Yes, there are obvious problems with this, but the scale is getting out of hand.
[+] [-] seoaeu|3 years ago|reply
[+] [-] lupire|3 years ago|reply
"28 years" is still too high, but the units don't compare directly. Use "living wage" income for that.
[+] [-] _uy6i|3 years ago|reply
I’m constantly amazed by my friends who can get into the minutiae of Covid epidemiology or climate science, can’t or won’t embrace the most rudimentary economic concepts and principles because it conflicts with their social beliefs
[+] [-] ZeroGravitas|3 years ago|reply
This is just a slightly less fanciful trope than the "being nice to gays causes hurricanes" thing. You can tell its not actually believed for similar reasons.
If being nice to gay people actually caused hurricanes there's all sorts of useful information we could glean from that and use to make the world better, to fix droughts for example.
But the meteorologists weren't the one that noticed this surprising link, were they? It was the people who don't like gay people who spotted it.
Similarly, if there was actual useful information about how progressive policy X was bad for progressive goal Z, then people would want to know that information and use it. But weirdly, it's the non-progressives who have all these reasons why progressive stuff is bad for progressives.
So you're left in a climate change denial type situation where you need to believe that the whole of academia and government around the world is in cahoots to cover up the truth for unclear reasons.
"They're killing all the birds to make expensive unreliable energy and climate change isn't even real!" Well the bird experts, economists, climate and energy folk all think you're wrong but don't let that stop you.
[+] [-] spicyusername|3 years ago|reply
A quick summary of the supposed reasons for the high price tag discussed in this article:
- increases is labor and material prices
- stringent environmental and labor standards
- high parking requirements
- lengthy local approval processes
- bureaucracy to secure financing
- [paying] construction workers union-level wages
- paying attorneys and consultants to navigate state and local bureaucracies to secure financing
- consulting fees and other administrative costs
[+] [-] idiotsecant|3 years ago|reply
[+] [-] JTbane|3 years ago|reply
[+] [-] pclmulqdq|3 years ago|reply
[+] [-] bombcar|3 years ago|reply
If I am building a building with 50 high-end condos, I won't bother making cheaper ones for my affordable units, I'll just designate some as affordable and maybe skimp on the trimmings, but even then probably not much because of the hassle.
[+] [-] seoaeu|3 years ago|reply
Long term, we do need more market rate (“luxury”) housing stock. But they cannot be instead of trying to help people who need it now
Some places do social housing where they rent a fraction of the units to upper income individuals to subsidize the rest. However in the US funding sources generally have rules that say the units can only be rented to households making less than X% of the area median income. Which isn’t necessarily a bad thing: even in a properly functioning housing market there are going to be some people who cannot afford mark rate housing, and the assumption is that everyone else will rent market rate units
[+] [-] bradleyjg|3 years ago|reply
If you want you want real affordable housing you need market rates that are affordable, not special set aside units.
[+] [-] lumost|3 years ago|reply
Developers need to compete at this price point, the cost of construction is probably a loosely linear function of land value. Land value has been inflated by a puzzling combination of NIMBYs, interest rates, and economic growth.
[+] [-] mdavis6890|3 years ago|reply
This is how we end up with rent control and tight building restrictions - because it solves both problems. Roll up the drawbridge against new people by blocking development, but then make the housing affordable by fiat.
The only remaining problem then is 10 year waitlists to get into one of those rent controlled spaces. Bummer on that...
[+] [-] Gigachad|3 years ago|reply
[+] [-] yumraj|3 years ago|reply
Honest question: why does affordable housing needs to be 3 or 4 bedroom? Shouldn't they be mostly Studio and 1-bedroom apartments, and at most, 2-bedroom, that too rarely?
4-bedroom sounds like a luxury apartment and not an affordable apartment.
[+] [-] jseliger|3 years ago|reply
From there, people should be able to decide for themselves; "decide for yourself how much housing unit you want to buy" was common, until the '70s: https://jakeseliger.com/2015/12/27/why-did-cities-freeze-in-...
[+] [-] idiotsecant|3 years ago|reply
No. It's not an intuitive result, but it makes sense when you think about it. Bedrooms are cheap to build. Kitchens and bathrooms are expensive to build. Building 3 units with a total of 3 bedroom, 3 kitchens, and 3 bathrooms is a much less efficient setup than building a 3 bedroom 2 bathroom unit. If you incentivize people to have roomates or co-habitate with extended family by building bigger suites you can make housing cheaper overall.
[+] [-] msbarnett|3 years ago|reply
[+] [-] fshbbdssbbgdd|3 years ago|reply
[+] [-] standardUser|3 years ago|reply
[+] [-] Retric|3 years ago|reply
[+] [-] alex_young|3 years ago|reply
[1] https://www.usich.gov/homelessness-statistics/ca/
[+] [-] djohnston|3 years ago|reply
[+] [-] ruined|3 years ago|reply
[+] [-] lupire|3 years ago|reply
[+] [-] robonerd|3 years ago|reply
In some countries, cultures or communities, a family of ten might be living in a single bedroom. Maybe anything more spacious than that should be your standard for luxury. Or further maybe; any shelter that keeps you dry is the bare minimum. If it keeps you dry and warm, that's luxury. Why not? If you get chilly you can use a blanket; furnaces are luxury. Do you really need anything more than a primitive FEMA tent? Running water plumbed straight into your home is a luxury, you can bring a water bucket to a community spigot every day. If you think that's too much work you're just being entitled.
[+] [-] smn1234|3 years ago|reply
Mafia never left. Just transformed
[+] [-] mindvirus|3 years ago|reply
[+] [-] imtringued|3 years ago|reply
[+] [-] stevenjgarner|3 years ago|reply
[1] https://www.zenithdesignbuild.com/blog/how-much-does-it-cost...
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] Sparyjerry|3 years ago|reply
[+] [-] thereisnospork|3 years ago|reply
[+] [-] ngcc_hk|3 years ago|reply
Of course $1m is still quite high, btw.