By David M. Greenwald
One of the biggest facets of the housing crisis is that it paradoxically is almost self-perpetuating. Emily Badger in the NY Times this week, argues, “The economics of the housing market, and the local rules that shape it, have squeezed out entry-level homes.”
Her article notes that, as recently as the 1990s, builders were still producing what was referred to as a “starter home”—somewhere around two stories, three bedrooms, 1400 square feet or less, priced at around $100 to $125 thousand (or $200 thousand in today’s dollars).
Badger writes, “That house would be in tremendous demand today.”
Further problem: “You couldn’t buy those Denver area homes built 25 years ago at an entry-level price today, either. They go for half a million dollars.”
She believes: “The disappearance of such affordable homes is central to the American housing crisis.”
In short: “The nation has a deepening shortage of housing. But, more specifically, there isn’t enough of this housing: small, no-frills homes that would give a family new to the country or a young couple with student debt a foothold to build equity.”
One reason for this: “The affordable end of the market has been squeezed from every side. Land costs have risen steeply in booming parts of the country. Construction materials and government fees have become more expensive. And communities nationwide are far more prescriptive today than decades ago about what housing should look like and how big it must be. Some ban vinyl siding. Others require two-car garages. Nearly all make it difficult to build the kind of home that could sell for $200,000 today.”
We see this play out in Davis all the time—activists pressure developers to add all of these features to projects and then turn around and complain that the housing they are proposing is unaffordable. They then turn around and kill the project, which of course only serves to make whatever housing exists and whatever housing is proposed even more unaffordable.
The result is “the economics of the housing market — and the local rules that shape it — have dictated today that many small homes are replaced by McMansions, or that their moderate-income residents are replaced by wealthier ones.”
Scarcity also drives the cost problem.
Badger further notes: “At the root is the math problem of putting — or keeping — a low-cost home on increasingly pricey land.”
Tiny homes to the rescue for homelessness?
Marisa Kendall of the Mercury News asks, “Do tiny homes really work as a solution to homelessness?”
The tiny home has become “the hot new thing in the fight to end homelessness.”
It makes some sense—small, cheap, easy to build, “The simple dwellings have multiplied across the Bay Area in the last few years and have been touted in splashy news conferences by everyone from the region’s big city mayors to Gov. Gavin Newsom as a salve to one of California’s thorniest problems.”
Key question: “Can a temporary stay in a tiny home be a final step on the path to permanent housing?”
The Bay Area News Group spent “four months following several tiny home residents and analyzed three years of data from Santa Clara and Alameda – the counties with the Bay Area’s largest homeless populations, and the two that have most fully embraced tiny homes – with the goal of determining how well the model works to get people into stable housing.”
The news organization’s analysis found:
- Tiny homes don’t work for most participants: People moving out of tiny homes in Alameda County failed to find permanent housing nearly three-quarters of the time between June 2019 and June 2022. In Santa Clara County, people failed to find permanent housing more than half of the time.
- But tiny homes work better than traditional homeless shelters: Stays in the two counties’ largest dorm-style homeless shelters failed to lead to permanent housing between 84% and 98% of the time. Tiny homes also tend to offer more services than other shelters, but as a result, can be much more expensive to operate.
- More support helps: The data suggests there are several things tiny home programs can do to up their odds of success, although all of them boost costs – including connecting residents to case workers and giving them access to private bathrooms. Allowing people more time to get back on their feet also can help, as participants who stay longer than six months are more likely to move into permanent housing. But most tiny home programs are set up for stays of just two to six months.
- It all comes back to the affordable housing shortage: There just isn’t enough permanent housing available for everyone leaving a tiny home. Bay Area rents are among the highest in the country and wait lists for subsidized units and housing vouchers are discouragingly long.
Bottom line, it seems—we need permanent supportive housing and more affordable housing.