Tag Archives: pop-ups

Rising housing prices impact all incomes

In cities with strong real estate markets, affordable housing is a big problem. And it’s not just a problem for those with lower incomes, it’s a problem for everyone. The problems aren’t even limited to just their own metro areas.

Note: in this case, the term “affordable housing” refers to the plain meaning of the word: housing that is affordable (not Affordable Housing, in reference to a set of programs designed to subsidize the cost of housing – see this from Dan Keshet on the difference, as well as a better way to think about it: abundant housing).

Expensive housing is squeezing people at all income levels

The DC Fiscal Policy Institute documented the disappearance of DC’s market-rate affordable apartments in a report: Going, Going, Gone. And while the focuses on the dramatic decline in apartments available for an inflation-adjusted $800/month between 2002 and 2013, rents are up for all incomes in that same time period – and they’ve increased faster than income growth.

DCFPI_rents1

Rising rents for those with higher incomes presents less of a challenge, since these households can afford it. But simply because higher income households can afford higher rents doesn’t they want to pay more than they have to.

It’s not just a phenomenon in DC, but in lots of strong real estate markets. Richard Florida summarizes some research from Todd Sinai at the University of Pennsylvania, noting that rents in many cities have been outpacing income gains for more than a decade. Like DC, rents are rising and requiring a larger portion of income for a wide range of income brackets:

pennrentstrends

The upward trend for each of these lines represents a larger and larger portion of household incomes spent on rent in cities across the US. Sinai suggests that any policy response would require a large increase in the supply of market-rate housing (as politically challenging as increasing housing density can be). Because even a large increase in housing units would merely moderate prices, Sinai recommends a targeted program of housing subsidies, as well.

Even with these potential remedies in mind, Sinai isn’t optimistic: “It is hard to conclude that there is an affordability cliff from whence we can step back from the brink.  Rather, the threat to housing affordability in this country is much more fundamental, and more economically pervasive.”

The higher rents are hurting the economy

It’s not just an inconvenience to pay a lot to rent an apartment, even if you can afford it. As Sinai argues, this added rental cost is “economically pervasive.” Put another way, the failure to add housing supply in strong markets is a huge drag on the economy. Kriston Capps summarizes research by Enrico Moretti and Chang-Tai Hsieh:

Hsieh and Moretti came up with a way to measure what local output and national growth would look like if wage dispersion were equalized. They proposed a model that lowered the regulatory housing constraints in New York, San Francisco, and San Jose to the level of a median city. If workers were able to cross over from low-wage cities to high-wage cities—that is, if New York, San Francisco, and San Jose were to lower barriers to new housing and let them in—then GDP could rise by 9.5 percent.

Easier said than done, but it does show the magnitude of the problem. More people would move to these productive metropolitan areas if the housing prices were more affordable.

Affordable Housing vs. affordable housing

Part of the reason to illustrate rising housing burdens for all incomes is to help define what “affordable housing” means. The plain English meaning is simply housing that is affordable. Relative to a household’s income, how much can they afford to easily pay for rent or a mortgage?

Then there is Affordable Housing (capitalized here), referring to a whole host of programs that subsidize housing for lower-income households. Labeling these subsidies under the umbrella of Affordable Housing is an effective bit of rhetoric to earn support for these programs (who would possibly be against affordable housing?) in light of the sullied reputation of public housing.

You can see the confusion in some of DC’s recent debates about the impacts of rowhouse pop-up expansions on housing prices. The DC Zoning Commission recently tightened rules on development in these zones, with one commissioner unconvinced that additional housing units would create more affordability:

But Anthony Hood, the chair of the commission, pushed for the restrictions, saying that he didn’t believe that pop-ups and condo conversions helped bring down housing prices.

“This connection to affordable housing? I’m sorry, I haven’t seen it yet. I’m still waiting for it. It’s not a reality.”

If Hood is thinking of capital-A Affordable Housing, then he’s correct. But that’s not the only meaning of the term; it’s not the only measure of affordability. And while additional market-rate housing units might not directly help lower-income households, they can make a big difference for those middle-income households feeling a squeeze.

Flipping Houses, Zoning Codes, and Building Codes

DC row houses - the first CC image hit for "dc house flips" on Flickr. Photo from Elvert Barnes.

DC row houses – the first CC image hit for “dc house flips” on Flickr. Photo from Elvert Barnes.

Earlier in May, local public radio station WAMU aired a lengthy three-part report on the collateral damage involved in house flipping in DC. Martin Austermuhle’s series offers a window into the nightmare for buyers of newly renovated homes – often converted from single family rowhomes into multi-unit buildings – who soon learn that their dream home is actually a nightmare of shoddy work and potentially illegal construction.

The three-part series focuses on buyers, developers, and the city’s regulatory response.

As horrifying as these stories are, Austermuhle correctly focuses on the challenges of enforcing the building code as the root cause of these problems, rather than the zoning code.

Small-scale development is an important tool in strong markets (like DC) to respond to demand for new housing. So many opportunities for small-scale urban development have already been regulated out of existence in American cities. The people buying these flips aren’t suckers taken by con men; they represent the market for additional housing in a city like DC.

Shoddy flips shouldn’t put those remaining opportunities for small-scale development in DC at risk, because the problem here is with building code enforcement and inspection, not with zoning. But whenever there is outrage, there is a strong urge for the city to do something, even if it doesn’t address the stated problem.

The zoning code is not the building code

Tales of illegal construction in flipped houses might stoke the fears of development opponents, but the problems described in the series involve errors in construction.

Too often, cities attempt to use the zoning code as a catch-all regulatory structure, encompassing economic development goals, social policy, etc. Part of this is out of convenience (I did have at least one proponent express support to me for DC’s recent zoning code changes in rowhouse neighborhoods due to the challenges in enforcing the building code – both for approvals and for construction inspections). I suspect part is also a confusion of the issues, thinking that because zoning deals with the city therefore zoning is an appropriate place for regulations about the city.

This series helps clarify the differences; Austermuhle correctly gives zoning only a cameo appearance.

Pop up limits

Even with the focus on building code enforcement, that doesn’t stop public calls to address development issues via zoning restrictions. However, it’s not clear that zoning would stop the flips. House flips are hardly limited to structures with the opportunity to increase the total number of units.

Enforcement matters:  One example of shoddy construction also includes blatant violations of the zoning code. What good will modestly tighter zoning regulations do without basic enforcement? Perhaps zoning isn’t the root problem; enforcement is.

Building codes matter

While zoning codes often get the attention, this doesn’t mean building codes aren’t important factors in determining the shape of the city. Houston famously (or infamously) lacks standard, use-based zoning codes. However, Houston’s building code and other regulations still mandate many of the aspects commonly found in zoning codes: minimum on-site parking requirements, minimum lot sizes, etc. It’s not a regulation-free environment.

Even when the building code sticks to more traditional subject matter, there can still be a tremendous impact on the financial feasibility of certain types of construction. In February, Let’s Go LA featured a guest post from LA Architect Tom Steidl about local differences in LA’s high rise building codes that make Vancouver-style towers less financially feasible:

Towers in Los Angeles tend to have significantly larger floor plates than those in Vancouver and US cities that have embraced high-rise design. The primary reason for this isn’t differences in land use or zoning codes. It’s mainly building code and fire department regulations that require additional floor area be added to the core of the tower. In addition to making our towers more bulky, this added floor area increases construction cost and reduces affordability.

One of LA’s quirks (now removed from the code) was a fire department mandate for rooftop helipads. But, as Steidl notes, each requirement that reduces the efficiency of the floor plate adds to the total cost. High rises are already expensive to build and will only pencil out under certain circumstances. Adding costs on the margins only makes the developer’s pro forma more challenging.

The building codes matter. But, LA’s quirky code provides a cautionary tale on policy relying on high rises alone to absorb housing growth. As Payton Chung has written, achieving mass market affordable housing via expensive construction types is a challenge – particularly in DC.

A comprehensive approach to affordable housing in strong markets like DC and LA can’t ignore the key role of small-scale, low-rise development in providing affordably built housing. This means projects of the type taken on by house flippers; smaller scale projects that increase a single lot into 2-4 units.

Poor construction risks eroding confidence in small-scale construction that is vital to meeting housing demand. Likewise, a strong, predictable, and nimble team of inspectors needs to effectively enforce DC’s building codes to manage this period of change.

Lawsuits: the American Way.

Maybe they will help. Writing about some of the same flippers as Austermuhle (and working in parallel), Ian Shapira at the Washington Post notes that some of the same flippers have been sued by DC’s newly elected Attorney General. A more robust consumer protection watchdog can’t hurt, and could even help jump-start a more robust system of code inspections.

Pop-ups – what counts as ‘reasonable?’

Beware the imperative that we have to do something.

Despite protestations from DC’s former planning director Harriet Tregoning, the preliminary vote count on the plan to limit rowhouse pop-ups in DC is poised to pass, 3-2 (note that two of the zoning commissioners tentatively in favor are the federal representatives to the commission; see this Washington City Paper profile of commissioner Peter May for more about the federal role in local decisions in DC).

Among the local media, the Washington Post editorial board came out against the proposed regulations. Other local papers, such as the Northwest Current, are in favor. The single biggest reason for supporting the proposed changes is that they seem ‘reasonable.’

IMAG2257

It’s not hard to see why many DC residents are eager for ‘reasonable’ restrictions on pop-ups. There are quite a few ugly ones out there; some include suspect construction. However, the proposed changes in the zoning code won’t outlaw ugly additions and the zoning code doesn’t regulate construction methods or enforce the building code.

Part of the challenge with ‘reasonable’ restrictions on new development is that many of the impacts aren’t intuitive. Consider the aesthetics of pop-ups: Just as zoning code parking requirements won’t solve on-street parking hassles (you must manage those parking hassles directly), a small reduction in the allowable height and shifting certain elements away from by-right construction towards requiring a special exception won’t address concerns about design. Implement these changes to DC’s zoning code and many will still complain about pop-up development.

Pop-ups need not be ugly. Nor are they a new phenomenon.

Part of the concern about overly restrictive regulations is that limiting small-scale development is a serious constraint on the market’s ability to provide housing that is affordable to a wide range of incomes (here’s a perfect place to shift the narrative away from the nebulous ‘affordable housing’ and instead focus on providing abundant housing instead).

Still, without that background knowledge, it’s not hard to think that these restrictions won’t harm the District’s progress towards abundant housing. Proponents of allowing more growth argue pop-ups provide an opportunity for families and individuals to live in desirable neighborhoods at a lower price point. Meanwhile, the Northwest Current editorial board isn’t convinced that allowing additional housing supply helps ease the supply crunch. Instead, they would wish housing prices would drop naturally:

IMAG2256

However, the flip side of the “we’d rather just see the existing houses priced more affordably” coin is essentially an argument to lower property values. I don’t think we’ll see such an editorial from the Northwest Current anytime soon. Why? Because I doubt neither the editorial board nor the paper’s readership would consider advocacy to lower property values to be ‘reasonable.’

So, what are options to regulate pop-ups? A few ideas, keeping in mind the differing perspectives and scales)

  • Recognize the value of by-right development and the path of least resistance. Similarly, the idea of negotiating every single building project on a case-by-case basis might also seem reasonable, beware the unintended consequences of this approach.
  • Consider a form-based approach. The Coalition for Smarter Growth suggested an approach that mandates a setback for true pop-ups (those that retain the existing facade) or some other design treatment to minimize the visual impact. The challenge for this approach would be in enforcement. The advantage is that the regulatory authorities can offer clear guidance for this form of ‘lite’ administrative design review. It also avoids the perils of full-scale design review; a process that doesn’t keep the desired outcomes on the path of least resistance.
  • Remember: one of the goals of DC’s pending zoning code re-write was to reduce the burden on the BZA’s case load. Simply adding more cases to the pool of potential special exceptions is a step in the opposite direction.
  • Build more rowhouses. Part of the rationale for regulating pop-ups is a desire not just to preserve the urban design of DC’s rowhouse neighborhoods, but also to preserve larger housing units for families. If this is indeed a goal for the city’s housing strategy (and consistent with the desires for abundant housing), then the goal shouldn’t just be about preserving rowhouses, but encouraging the construction of more of them in existing single-family detached areas. This is also consistent with the city’s goals for accessory dwelling units as a part of the zoning re-write.
  • Build more multi-family housing. Work to relieve development pressure from the other end by allowing the construction of more small-scale apartment and condo buildings. DC has many of these grandfathered into existing R-4 (rowhouse) zones. While the Comprehensive Plan does prioritize the preservation of rowhouse areas, the existing zoning clearly allows multi-unit buildings. While much of the commentary focuses on micro effects and ugly additions, lurking beneath the surface is a clear bias against additional dwelling units. This backlash mirrors other DC planning debates about accessory dwelling units and growth in general.
  • Develop a market-based housing plan for the city as a whole. Collect and distribute data on the overall housing market to better inform decisions on demand as well as new supply.
  • Shift the narrative around housing discussions away from ‘affordable housing’ and towards ‘abundant housing.’ Hopefully this shift can help avoid the counterfactual trap of new supply that is still expensive, yet cheaper than it would’ve been. Consider this: if car manufacturers could only build a limited number of cars, they would likely focus on higher-margin luxury models. The same is true of housing; yet this doesn’t disprove the impact of supply.  Just because new condos in popped-up buildings aren’t always cheap, that doesn’t mean the impact on the overall market isn’t real.

Any other ideas?

Seeing the forest for the trees, and vice versa

CC image from Vincent Ferron

CC image from Vincent Ferron

As the saying goes, sometimes you can’t see the forest for the trees. You can’t focus too hard on the details of each individual tree and still get the bigger picture – all of those trees form a larger ecosystem – a forest.

The expression (almost always used negatively) only speaks to one’s perspective, however. No matter that perspective, there is a forest comprised of many individual trees. The phrase is targeted at a person’s perspective, but it does speak to the differences in both scale and perspective about any given issue.

Let’s Go LA used this formulation to discuss the division between two broad schools of thought on urban housing, particularly in constrained markets with rising housing prices: those that focus on supply restrictions and those that focus on community integrity and preventing displacement.

The difference in tactics between these two groups often leaves them at odds with each other. However, these schools of thought are two sides of the same coin, with similar goals but approaching the problem from opposite ends. Call the land use liberalization advocates the “macro” view, focusing on overall regional housing supply, and the anti-displacement advocates the “micro” view, focusing on the stories of individuals affected by rapid neighborhood change.

The challenge in crafting policy is that both schools of thought have a claim to the truth. Crafting policy for a city isn’t a choice between the forest or the trees, as there isn’t a difference between the two approaches.

This isn’t the only dichotomy you’ll find in a city. I’ve written previously about the tensions that rise out of the different views of real estate in cities – it is both a financial investment and a component of a city’s urban design. Tensions between these schools of thought can be exacerbated by policies that conflate the two – is the mortgage interest deduction a policy focused on housing or on real estate investment?

  • Trees v. forest
  • Micro v. macro
  • Neighborhood v. region
  • Building v. neighborhood

DC’s debate about pop-up development similarly pits two competing views about the same city against one another: is the city an urban design forest being altered by the trees of the individual property rights of owners? Are those pop-ups representing a healthy regional housing market responding to demand, a forest ecosystem regenerating itself; or a metastastizing growth that threatens ‘neighborhood character?‘

Both are lenses we can use to look at the city. The challenge is finding a policy that can thread the needle without ignoring the bigger picture goals that can be more abstract: not the forest or trees, but a desire for a healthy environment (as an example). Let’s Go LA makes the case that finding that common ground and realizing that the trees make the forest while the forest comprised of the trees is critical in moving forward:

See the forest for the trees, or see the trees for the forest.

The key is to realize that we all share a common goal – a city that is affordable and accessible to all those who want it. When land use liberalization advocates and anti-displacement advocates argue with each other, we let the truly responsible parties – wealthy neighborhoods that stifle any and all development – off the hook.

Too often, the conversation turns into a debate about which perspective is ‘right.’ The reality is that both (all?) perspectives have value. The debate can obscure areas of agreement; it can also foster a misunderstanding of how cities evolve. The only constant is change.

Perspective on pop-ups

Recently, everyone in DC has been hopping on the bandwagon to bash an extensive redevelopment of a 2-story rowhouse into a 5-story condominium. Headlines make liberal use of middle finger references, with photo angles to match the description.

In the comments of one PoPville post on the house, a representative from DC’s Department of Consumer and Regulatory Affairs confirms that yes, indeed, this egregious “middle finger to taste and scale” is allowed by right. From @DCRA’s comment:

We have reviewed the approved building plans for this project and found the following:

1. The property is not within a historic district or designated as a historic landmark; it is zoned as C-2-B and is within the ARTS Overlay zoning district.

2. The approved height of the building shown on the plans is 59 feet, five inches, which is within the 65-foot height limit applicable a C-2-B zone.

3. The three-foot projection at the front of the building was properly approved by both DDOT and DCRA, and it meets District Building Code requirements.

4. The structural supports of the project, including its foundation, were reviewed and verified as meeting District Building Code requirements.

5. Because the property is within the ARTS Overlay zoning district, it is granted additional density. The project’s Floor Area Ratio (FAR) was approved at 3.94, which is below the maximum FAR of 4.0.

While we understand some residents’ concerns with the project’s aesthetics, in a non-historic district, the District’s Building Codes and zoning regulations focus only on safety and density.

This sounds like a perfectly conforming structure, but one wouldn’t get that impression from the photos of it on PoPville. Dan Malouff at GGW and BeyondDC offered a defense of the project, complete with photos from a different angle, putting the building’s neighbors into context. In particular, there’s a six-story apartment building under construction three doors down.

I visited the site to add my own photo from yet another angle:

A different angle on the 11th and V development. Photo by author.

When you look at both of the new developments from the southwest corner of 11th and V, things look a bit different. Considering how extensive this zoning combination (C-2-B/ARTS) is in the area, this shouldn’t be a surprise:

DC zoning map of 11th and V and surrounding area.

As you walk down V and look back to the west, you get even more perspective of nearby buildings on both sides of the street of similar height and similar zoning allowances. What a difference a change in angle makes:

Looking west down V st, showing buildings of similar height along both sides of the street. Photo by author. 

Dan makes the case that this small-scale, lot-by-lot redevelopment is a good thing. He cites the example of Amsterdam’s narrow houses built one by one. While I think the comparison might be a stretch, the point about flexible zoning allowing this kind of by-right redevelopment is a good one.

I would also note that by virtue of the C-class zoning, this stretch of V street is able to host a variety of building types and uses. Restaurants like Tacos el Chilangro wouldn’t be allowed to operate without it.