Affordable Housing Starts with Today’s Housing Stock

July 5, 2019

Photo of multi-unit residential buidling showing two front doors and multiple mailboxes at top of stairway

Over the past year, Clarion Directors have participated in several conference sessions about the housing affordability crisis that affects almost all of our clients. Clarion’s panel discussion at the Rocky Mountain Land Use Institute focused on Disruptive Responses to Housing Affordability, a training session at the Denver Regional Council of Governments addressed residential occupancy limits under the title Doubling Up and Dealing With It, and an APA national conference session on Creative Approaches to Student Housing Challenges explored the complex affordability issues in college towns.

While the affordability strategies in each case differed, three common themes continue to emerge throughout the country.

  • We Cannot Build Ourselves Out of This Problem. Overall, the U.S. replaces less than three percent of its housing stock each year. That means that adding more flexible housing options like cottages, co-housing, Tiny Houses, patio homes, triplexes, and fourplexes will not loosen housing markets and bring prices down right away. New construction of innovative housing will add units to the market faster than if each lot were developed with a single-family detached home, but occupancy of those additional units will still be limited to those who can buy or pay (pretty high) rents based on new construction costs. On the other hand, allowing some of the existing single-family housing stock to be converted into duplexes, triplexes, or fourplexes has the potential to significantly loosen the housing market, because it does not depend on new housing construction and is less influenced by high construction costs.
  • Accessory Dwelling Units are an Important Part of the Answer. Allowing ADUs is often a contentious topic, but ADUS can make a significant contribution to affordability. Unlike other forms of housing construction, building an ADU or adding one to an existing home does not involve buying land – and land costs can constitute up to one-third of the final cost of new housing units. While high construction costs still drive up prices, their influence is smaller when the unit being constructed is small or an existing housing unit is being renovated. Finally, their impact on neighborhood character is usually dispersed, because not all property owners decide to pursue ADUs and those that do are likely to be scattered. Experience shows, however, that requiring additional parking, additional water connections, or public hearings for special ADU permits can significantly reduce the number of ADUs created.
  • We Need to Get Reasonable About Occupancy Limits. While many communities have limits on the number of unrelated adults who can live together (usually three or four, but sometimes two in college towns), those limits are difficult and unpopular to enforce, and many communities avoid enforcing them. Usually, limits on unrelated occupancy are much more restrictive than necessary to protect public health, safety, or overcrowding; they are intended to protect a desired neighborhood character. But unreasonably low occupancy limits are a major contributor to unaffordable housing, and adjusting those limits upward would go far towards better aligning housing needs with available housing stock in many U.S. communities.

Clarion Associates will continue to assist its clients in finding the best tools to promote affordable housing – by promoting both new construction and more efficient use of existing housing.