Affordable Housing

KC topics that don't fit anywhere else.
earthling
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Re: Affordable Housing

Post by earthling »

FangKC wrote: Sun Oct 17, 2021 5:23 pm Rent is going up so fast, it’s not just pricing out residents — it’s hurting Kansas City
...
If you zoom in on eastern Kansas City, the data is even bleaker. Over the same time period, rent increased by 13.1% in eastern Kansas City. Meanwhile, Nevinger calculates only 4.8% wage growth for the same part of the metro over the same time period, using U.S. Bureau of Labor Statistics data.

"So 12 months earlier, your rent in east Jackson County, in Independence and east Kansas City, was $791 per unit, which was the lowest in the Metro area," Nevinger says. "And now it's all the way up to $895."
...
https://www.kcur.org/housing-developmen ... apartments
^Midtown rents going up will become a consequence of streetcar. Not just the value that streetcar will bring but also the streetcar TDD passed on to rising rents. It's unfortunate but is what happens with an investment at that level involving TDD method of funding rather than usage tax (a fare). Hopefully the silver lining is E Side ultimately benefits from downtown/midtown 'gentrification' with the right balance that E Side itself doesn't see much gentrification. However KC wages for lower half of median income also need improvement. Per above, rents are rising faster than income.. KC being harder hit in the net COL/income change ratio than many other metros. There needs to be a new term for Cost of Living (COL) for those below the median... COS (Cost of Survival).
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TheLastGentleman
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Re: Affordable Housing

Post by TheLastGentleman »

kas1 wrote: Sun Oct 17, 2021 5:20 pmBut the metro area is full of old houses, whether in old Johnson County or Raytown or wherever. As long as there's a sufficient supply of total housing, there will always be shabby, rundown areas where you can find a deal. And that's not just hypothetical. North Johnson County has already seen an influx of low-income households as wealthy people keep moving further south. There are payday lenders around the corner from downtown Overland Park. There's a finite number of rich people, and they can only live in one home at a time. No matter how much they move around, they'll always be leaving behind homes to be occupied by non-rich people. If one area is gentrifying, another area must necessarily be doing the opposite. Ideally, though, there'd simply be enough new construction in the gentrifying neighborhoods to accommodate the newcomers without any mass displacement.
This ignores geography, though. The further anyone is sent out into the burbs, the longer the commute. Not even public transit can square that. KC has an opportunity to establish significant worker housing deep in the core, where people of all classes can walk to work or core attractions, but it's extremely discouraging how much kcrag members and businesspeople in the media act scared of that idea.

In KC the entire socioeconomic makeup of an area can change within just a few blocks. A life lived in Raytown will inevitably be very different from one lived in the Crossroads.
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Re: Affordable Housing

Post by kas1 »

TheLastGentleman wrote: Sun Oct 17, 2021 7:43 pmThis ignores geography, though. The further anyone is sent out into the burbs, the longer the commute. Not even public transit can square that.
This is a good point. Yet at the same time, somebody has to live there. That's where homes have been built. Or well, strictly speaking it's not true that homes must be occupied simply because they exist, but it's generally desirable for existing homes to get utilized.

But again, the ideal outcome would be that housing is constructed fast enough that there is enough available to accommodate everyone who wants to live where they want (within reason). If somebody has a plan for how to achieve that then I'm all ears. But what I see from affordable housing advocates generally isn't any sort of plan. "Build lots of affordable housing" is not a plan. It's a goal. "Force developers to rent units for less than they cost to build" may be some sort of plan, but it's a plan for stifling development rather than generating more of it. Likewise for "Stop giving tax incentives to housing projects." "Prevent landlords from raising rents" may be a plan to protect existing residents, but it's not a plan that addresses the long-term issue of building enough housing to keep up with population growth.

The housing market is going to be painful for a while. Cities need to correct for decades of poor planning decisions, and this will cost money. Meanwhile, lack of action on minimum wage pushes more and more people below the level of being able to afford unsubsidized new-construction housing. These are serious problems that require serious solutions. What I've seen from the current administration is grandstanding and posturing.

In another thread recently I alluded to the streetcar being a waste of money, and this discussion provides an excellent snapshot of why. Hundreds of millions of dollars are being spent to upgrade a bus route into a fancier version of itself. That's real money that could have been spent on real problems. You could have taken that money and thrown it at developers who are willing to build projects that meet whatever sort of benchmarks the city establishes, whether in terms of design or rent levels or whatever. But of course, the funding itself probably could not have materialized if it were to be used for something other than letting people ride a tram instead of a bus, which is a pretty sad reflection of our current state of government. Our society is deeply broken.
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Re: Affordable Housing

Post by flyingember »

kas1 wrote: Mon Oct 18, 2021 3:20 am

In another thread recently I alluded to the streetcar being a waste of money, and this discussion provides an excellent snapshot of why. Hundreds of millions of dollars are being spent to upgrade a bus route into a fancier version of itself. That's real money that could have been spent on real problems. You could have taken that money and thrown it at developers who are willing to build projects that meet whatever sort of benchmarks the city establishes, whether in terms of design or rent levels or whatever. But of course, the funding itself probably could not have materialized if it were to be used for something other than letting people ride a tram instead of a bus, which is a pretty sad reflection of our current state of government. Our society is deeply broken.
You didn't think through the finances and how the streetcar financial model benefits affordable housing dramatically.

A regular bus pass cost $50 per person per month. For a family of three that's $5400 less per year.

Making $15/hour * 2 = $62400 annually. 35% coming out for taxes, benefits = $40560 left. * 0.01 for the sales tax rate * .03 for percent paid towards taxable goods = $121
+ $365 for the assessment

= 486 paid in taxes for the streetcar

Leaving a net gain of $4910 available towards rent. At the city average, that's 4.5 months of rent not paid for transportation.
Now, you can get the same benefit from a free bus, absolutely.


In another thread I gave the math for when the train costs less than the bus, and that's about 1/3 capacity of the train.

Today, 200 people per hour moved means the train is more affordable. A lot of bus routes are nowhere near this scale but it shows it's not train vs bus, it's which mode makes more sense for the corridor. Free service paid for with a dedicated tax everyone pays is dramatically better for housing affordability.

Since we know required parking plays a huge part in affordability issues, could build more units in the same space without it and gain economy of scale, encouraging transit use through lesser parking allowances naturally will favor the train with time.
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Re: Affordable Housing

Post by phuqueue »

kas1 wrote: Sun Oct 17, 2021 5:20 pm
phuqueue wrote: Sun Oct 17, 2021 9:45 amMy reason for bringing up NYC was that it shows a glut and shortage existing simultaneously in what is allegedly all just one market, which would be kind of a curious situation if it were really the case. I'm under no illusion that a few thousand apartments will resolve NYC's housing crisis and it was never my intention to suggest otherwise, but if housing across various market segments is so freely interchangeable, then the mechanical application of basic principles of microeconomics that you rely on would suggest that those few thousand apartments should, at least, not be sitting vacant.
That the housing market is all interconnected does not imply that it is perfectly liquid and that units are all interchangeable. If something is imbalanced then it will cause a cascading effect across adjacent segments of the market, but 3000 units is a rounding error in a market the size of New York. The effects will simply get lost in the noise before they spread very far.

No one disputes that these cascading effects exist when rents go up in one sector, yet there's entrenched resistance to the idea that these effects also work in reverse.
I'm not interested in going back and forth about these NYC numbers ad nauseam. I'm not trying to have a conversation about housing in NYC, I am just using the example of NYC to call into question the fundamental assumption of free marketeers that sellers and buyers will inevitably find a price they can both be happy with. The point is not what effect 3000 apartments should have on the broader market, it is that half of all new units that were built over the prior five years wouldn't be empty if sellers were obliged to meet buyers' prices.
But developers do not need to directly provide affordable housing. Developers can only decide what sort of returns they want at the time of construction. Beyond that point the price will fluctuate based on what somebody is willing to pay for it. The overwhelming majority of the housing in Kansas City is old. Nobody knows or cares how much someone spent to build a house in 1950. The urban core was ultra-affordable for a number of years because buildings were worth less than it would cost to build them from scratch. Now the values are rising to close the gap with new construction, and this will shake up the market. I'm not unsympathetic to people who are impacted by this. But the metro area is full of old houses, whether in old Johnson County or Raytown or wherever. As long as there's a sufficient supply of total housing, there will always be shabby, rundown areas where you can find a deal. And that's not just hypothetical. North Johnson County has already seen an influx of low-income households as wealthy people keep moving further south. There are payday lenders around the corner from downtown Overland Park. There's a finite number of rich people, and they can only live in one home at a time. No matter how much they move around, they'll always be leaving behind homes to be occupied by non-rich people. If one area is gentrifying, another area must necessarily be doing the opposite. Ideally, though, there'd simply be enough new construction in the gentrifying neighborhoods to accommodate the newcomers without any mass displacement.
Developers don't need to directly provide affordable housing if there's sufficient spillover between different market segments for whatever housing developers do build to fill up. The phenomenon of developers holding vacant inventory until it can command the returns they are looking for despite clear demand in other market segments suggests that this condition is not necessarily actually met in the real world. And the practical problem with relying on decaying suburbs to house those displaced by gentrification is that the housing stock available in these areas is likely different from what was gentrified. Though the houses in North JoCo might be affordable by SFH standards, they might not necessarily be affordable to someone who has been displaced from a Midtown apartment. I'd also argue that it is inherently a problem to displace people from their homes to pad somebody else's bottom line in the first place, though I understand that many free marketeers would disagree (hence, again, the mailbox joke I made in my original post in the other thread). You say that, ideally, there'd be enough new construction to prevent that, which, sure, would be great. But in the real world, new construction will only take place for as long as it is profitable, and valuable new construction in the neighborhood will tend to raise the value -- and costs -- of the neighborhood as a whole, ultimately pricing out the people who were already there. Before you have reached such a volume of new construction that there are enough units for everyone and prices are affordable for all, the original residents will be long gone, but that's a moot point anyway, because you will never reach this volume of new construction in the first place, given that developers will not build units that lower property values.
If one area is gentrifying, another area must necessarily be doing the opposite.
This might currently be true in KC, but it is by no means necessarily true as a general matter, at least not in a way that is relevant to people being pushed out by gentrification, nor will it necessarily remain true in KC forever. Where gentrification is being driven by the arrival of new residents, the area "doing the opposite" is not just across town, it's potentially hundreds or even thousands of miles away in all the old Rust Belt cities and rural towns and wherever else that are bleeding population. It is small consolation to the guy who just got priced out of his home in Oakland that Michigan is in the process of anti-gentrifying.
This is analogous to saying that carmakers need to manufacture affordable cars so that poor people can own cars. They don't need to do this because there's an endless supply of used cars, and if you're desperate enough then you can practically name your own price for some pile of garbage. If there were no barriers on building new housing then the housing market would work nearly as well as the car market (and old houses hold up better than old cars).
Except that carmakers don't need to manufacture affordable cars so that poor people can own cars, because a car is not a basic material necessity, and millions of people do fine without them. Life is certainly much easier in most of the country if you have a car, but most of the country lives in places where you can get by without one, albeit at some (potentially a lot of) inconvenience. I would suspect that, generally, demand is therefore lower -- or at least far more price-elastic -- for cars than for homes, which helps drive prices down.

Cars are also dramatically less expensive than homes in the first place and then typically depreciate in value, so they are closer to being attainable than a home (in absolute terms of price, at least) from the outset and then their lifespan is one of inevitably becoming more and more attainable. I guess if you can flood the market with enough new construction to make housing affordable for everyone, most homes will likely substantially depreciate in value as well, but this is, again, precisely why developers aren't going to do that. Ford's business model is predicated on selling a car for $20,000, and the person who buys it knows it's going to lose resale value over time, but they're buying the car for its utility. A developer's business model is predicated on selling a home for $200,000, but nobody is going to buy it if they expect it to be worth $100,000 in ten years, because property ownership is not just about the utility of a house, we have been trained to consider it a source and store of wealth (for most people, their only significant source/store of wealth at this point). The problem remains even if the developer retains ownership and rents out the homes instead, because a developer is not going to continue building more and more units where he can charge only lower and lower rent (and for that matter, it is unlikely that any bank will finance construction that is expected, even intended, to depreciate in value).
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Re: Affordable Housing

Post by beautyfromashes »

phuqueue wrote: Mon Oct 18, 2021 10:01 am I'm not interested in going back and forth about these NYC numbers ad nauseam.
Too late.
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Re: Affordable Housing

Post by herrfrank »

herrfrank wrote: Sat Oct 16, 2021 2:08 pmDetached, SFH in large parts of the core of the metro are still selling below 200k -- I cannot reconcile this divergence with rents continuing long-term. Either houses go up to a 300k price floor or apartments come back down to 1000/ month.
Quoting myself LOL.

I think SFH houses in the core are going to increase in price. Or we have another recession that stifles population growth. A friend paid 195K in 2019 for a house near 99/ Holmes (there is a "nice" hidden area by the rivers there) and he just closed the sale at 250K. 25% increase in 2 years (and a pandemic to boot).

1. Where are all of these people coming from? Are these new immigrants or relocating from other states? The demand is clearly driving up rents (see KCUR article upthread).
2. This happened in Denver a few years ago -- look at housing prices there now. This does not end well for the poor. It happened in Seattle in the 1990s. Seattle used to be as cheap as KC when I was a kid in the 1970s (had family in Seattle and always was comparing the two).
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Re: Affordable Housing

Post by flyingember »

herrfrank wrote: Mon Oct 18, 2021 10:56 am
herrfrank wrote: Sat Oct 16, 2021 2:08 pmDetached, SFH in large parts of the core of the metro are still selling below 200k -- I cannot reconcile this divergence with rents continuing long-term. Either houses go up to a 300k price floor or apartments come back down to 1000/ month.
Quoting myself LOL.

I think SFH houses in the core are going to increase in price. Or we have another recession that stifles population growth. A friend paid 195K in 2019 for a house near 99/ Holmes (there is a "nice" hidden area by the rivers there) and he just closed the sale at 250K. 25% increase in 2 years (and a pandemic to boot).

1. Where are all of these people coming from? Are these new immigrants or relocating from other states? The demand is clearly driving up rents (see KCUR article upthread).
2. This happened in Denver a few years ago -- look at housing prices there now. This does not end well for the poor. It happened in Seattle in the 1990s. Seattle used to be as cheap as KC when I was a kid in the 1970s (had family in Seattle and always was comparing the two).
Homes in NKC are up like 20-30% over a few years ago. < 5 miles from downtown. That’s like living at Westport, give or take.

The buyers are moving from elsewhere in KC for a school district with a 95% graduation rate. The east side is continuing to empty out year after year.
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Re: Affordable Housing

Post by KCtoBrooklyn »

herrfrank wrote: Mon Oct 18, 2021 10:56 am I think SFH houses in the core are going to increase in price.
There was an article in the Star not too long ago that broke down what areas were seeing the largest % increases in home values and it was urban core/close to Downtown.

It's pretty astonishing what some houses are currently selling for on the East Side - and I'm not talking about just east of Troost, I mean east of 71.
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Re: Affordable Housing

Post by FangKC »

2021 Rent Growth

A year-over-year comparison of all asset classes across 30 major metros, provided monthly by Yardi Matrix.
...
On a month-over-month basis, rents rose 1.7 percent in August, with all top 30 metros posting positive rent growth and 26 of them had 1.0 percent growth or higher. Las Vegas (3.3 percent), the Inland Empire and Seattle (both 3.1 percent) registered the highest increases. Kansas City (0.2 percent), San Francisco (0.5 percent) and the Twin Cities (0.7 percent) occupied the bottom ranks. While San Francisco still deals with out-migration and limited supply (3.3 percent of stock delivered in the last 12 months, with the bulk concentrated in the Lifestyle asset class), Kansas City and the Twin Cities are returning to typical growth rates for Midwest cities.
...
...
On a month-over-month basis, rents rose 1.8 percent, with 26 of the top 30 metros posting rent growth of 1.0 percent or greater. San Jose had its best performance since the onset of the health crisis and led all markets with a 3.6 percent rent improvement. Raleigh followed with a 3.5 percent increase. In New York (3.0 percent) and San Francisco (1.8 percent), rent gains were still below their pre-pandemic period, but residents seem to be returning. If the trend continues, rents will likely return to 2019 levels by year’s end. Midwest cities that posted sturdy performance earlier in the health crisis have now fallen to the bottom of the list—Twin Cities (flat rate), Baltimore (0.7 percent), Indianapolis and Kansas City (both 0.8 percent).
...
https://www.multihousingnews.com/post/2021-rent-growth/
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Re: Affordable Housing

Post by KCtoBrooklyn »

KCtoBrooklyn wrote: Mon Oct 18, 2021 2:36 pm
herrfrank wrote: Mon Oct 18, 2021 10:56 am I think SFH houses in the core are going to increase in price.
There was an article in the Star not too long ago that broke down what areas were seeing the largest % increases in home values and it was urban core/close to Downtown.

It's pretty astonishing what some houses are currently selling for on the East Side - and I'm not talking about just east of Troost, I mean east of 71.
To elaborate:

Here are home sales in the 64128 zip - the core of the East Side - east of Prospect, between 27th and 39th. This shows the last 10 years, calculated quarterly.

Prices were hanging around $10k for quite a while, started going up 5 years ago, and reached over $110k last quarter. Then, there was a dip. I'm not sure if that is anomaly (or the previous quarter was the anomaly). My guess is that more investors are offloading their rundown, vacant properties which caused the average to drop.

Obviously, $110k for a home is still pretty cheap, but what surprises me is that a number of homes in 64128 can sell for over $200k. The average is brought down by the rundown homes selling from $30k to $60k. A few years ago, you couldn't give those homes away (and many were torn down).

Image

And here is the zip just to the west, 64109. Goes from Gillham to Prospect. Averages went from $50k 10 years ago to a recent peak of over $300k.

Image
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Re: Affordable Housing

Post by FangKC »

Some of the rise could simply be real estate investors buying up large numbers of single family houses in the market to rent out. There is a lot of money floating around among the wealthier segments of our economy and they are plying a lot of that money into real estate.
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Re: Affordable Housing

Post by CrossroadsUrbanApts »

phuqueue wrote: Mon Oct 18, 2021 10:01 am
kas1 wrote: Sun Oct 17, 2021 5:20 pm
phuqueue wrote: Sun Oct 17, 2021 9:45 amMy reason for bringing up NYC was that it shows a glut and shortage existing simultaneously in what is allegedly all just one market, which would be kind of a curious situation if it were really the case. I'm under no illusion that a few thousand apartments will resolve NYC's housing crisis and it was never my intention to suggest otherwise, but if housing across various market segments is so freely interchangeable, then the mechanical application of basic principles of microeconomics that you rely on would suggest that those few thousand apartments should, at least, not be sitting vacant.
That the housing market is all interconnected does not imply that it is perfectly liquid and that units are all interchangeable. If something is imbalanced then it will cause a cascading effect across adjacent segments of the market, but 3000 units is a rounding error in a market the size of New York. The effects will simply get lost in the noise before they spread very far.

No one disputes that these cascading effects exist when rents go up in one sector, yet there's entrenched resistance to the idea that these effects also work in reverse.
I'm not interested in going back and forth about these NYC numbers ad nauseam. I'm not trying to have a conversation about housing in NYC, I am just using the example of NYC to call into question the fundamental assumption of free marketeers that sellers and buyers will inevitably find a price they can both be happy with. The point is not what effect 3000 apartments should have on the broader market, it is that half of all new units that were built over the prior five years wouldn't be empty if sellers were obliged to meet buyers' prices.
But developers do not need to directly provide affordable housing. Developers can only decide what sort of returns they want at the time of construction. Beyond that point the price will fluctuate based on what somebody is willing to pay for it. The overwhelming majority of the housing in Kansas City is old. Nobody knows or cares how much someone spent to build a house in 1950. The urban core was ultra-affordable for a number of years because buildings were worth less than it would cost to build them from scratch. Now the values are rising to close the gap with new construction, and this will shake up the market. I'm not unsympathetic to people who are impacted by this. But the metro area is full of old houses, whether in old Johnson County or Raytown or wherever. As long as there's a sufficient supply of total housing, there will always be shabby, rundown areas where you can find a deal. And that's not just hypothetical. North Johnson County has already seen an influx of low-income households as wealthy people keep moving further south. There are payday lenders around the corner from downtown Overland Park. There's a finite number of rich people, and they can only live in one home at a time. No matter how much they move around, they'll always be leaving behind homes to be occupied by non-rich people. If one area is gentrifying, another area must necessarily be doing the opposite. Ideally, though, there'd simply be enough new construction in the gentrifying neighborhoods to accommodate the newcomers without any mass displacement.
Developers don't need to directly provide affordable housing if there's sufficient spillover between different market segments for whatever housing developers do build to fill up. The phenomenon of developers holding vacant inventory until it can command the returns they are looking for despite clear demand in other market segments suggests that this condition is not necessarily actually met in the real world. And the practical problem with relying on decaying suburbs to house those displaced by gentrification is that the housing stock available in these areas is likely different from what was gentrified. Though the houses in North JoCo might be affordable by SFH standards, they might not necessarily be affordable to someone who has been displaced from a Midtown apartment. I'd also argue that it is inherently a problem to displace people from their homes to pad somebody else's bottom line in the first place, though I understand that many free marketeers would disagree (hence, again, the mailbox joke I made in my original post in the other thread). You say that, ideally, there'd be enough new construction to prevent that, which, sure, would be great. But in the real world, new construction will only take place for as long as it is profitable, and valuable new construction in the neighborhood will tend to raise the value -- and costs -- of the neighborhood as a whole, ultimately pricing out the people who were already there. Before you have reached such a volume of new construction that there are enough units for everyone and prices are affordable for all, the original residents will be long gone, but that's a moot point anyway, because you will never reach this volume of new construction in the first place, given that developers will not build units that lower property values.
If one area is gentrifying, another area must necessarily be doing the opposite.
This might currently be true in KC, but it is by no means necessarily true as a general matter, at least not in a way that is relevant to people being pushed out by gentrification, nor will it necessarily remain true in KC forever. Where gentrification is being driven by the arrival of new residents, the area "doing the opposite" is not just across town, it's potentially hundreds or even thousands of miles away in all the old Rust Belt cities and rural towns and wherever else that are bleeding population. It is small consolation to the guy who just got priced out of his home in Oakland that Michigan is in the process of anti-gentrifying.
This is analogous to saying that carmakers need to manufacture affordable cars so that poor people can own cars. They don't need to do this because there's an endless supply of used cars, and if you're desperate enough then you can practically name your own price for some pile of garbage. If there were no barriers on building new housing then the housing market would work nearly as well as the car market (and old houses hold up better than old cars).
Except that carmakers don't need to manufacture affordable cars so that poor people can own cars, because a car is not a basic material necessity, and millions of people do fine without them. Life is certainly much easier in most of the country if you have a car, but most of the country lives in places where you can get by without one, albeit at some (potentially a lot of) inconvenience. I would suspect that, generally, demand is therefore lower -- or at least far more price-elastic -- for cars than for homes, which helps drive prices down.

Cars are also dramatically less expensive than homes in the first place and then typically depreciate in value, so they are closer to being attainable than a home (in absolute terms of price, at least) from the outset and then their lifespan is one of inevitably becoming more and more attainable. I guess if you can flood the market with enough new construction to make housing affordable for everyone, most homes will likely substantially depreciate in value as well, but this is, again, precisely why developers aren't going to do that. Ford's business model is predicated on selling a car for $20,000, and the person who buys it knows it's going to lose resale value over time, but they're buying the car for its utility. A developer's business model is predicated on selling a home for $200,000, but nobody is going to buy it if they expect it to be worth $100,000 in ten years, because property ownership is not just about the utility of a house, we have been trained to consider it a source and store of wealth (for most people, their only significant source/store of wealth at this point). The problem remains even if the developer retains ownership and rents out the homes instead, because a developer is not going to continue building more and more units where he can charge only lower and lower rent (and for that matter, it is unlikely that any bank will finance construction that is expected, even intended, to depreciate in value).
I acknowledge that market segmentation in the residential rental market is a real thing. But is there any evidence at all that developers in Kansas City are holding apartments vacant rather than lease them out at a lower price? That would really surprise me. In my experience we are seeing big rental incentives (2+ months free) given to tenants to lease up vacant apartments in the new projects that have opened up in the Crossroads. I don't see any developers keeping apartments vacant for years in order to keep prices high.

Personally, I think the market segmentation argument as being true but trivial. It strikes me more as anecdotal anti-developer sentiment than as an issue that policy makers need to deal with in any way. Whatever impact it has is far outweighed by zoning restrictions and high construction costs. That's where policy makers need to focus their efforts.
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Re: Affordable Housing

Post by phuqueue »

Again though, my point in raising the example wasn't to say that this is the root cause of the housing shortage, it was only to call into question the belief that the free market is the solution. There is a lot of magical thinking about how the market works that neglects to consider how actors within the market respond to dynamic market conditions. I raised the example of developers holding back vacant apartments as one concrete example of the complications that can arise in the real world market.

Though it's beside the point (at least, it's beside the point that I'm trying to make), to address your specific question, I don't know whether there are any examples of developers in KC holding back vacant inventory, but yes, I would also be surprised -- I mean, if they haven't yet overbuilt in KC, there wouldn't even be vacant units for them to hold back, and prices being more compressed in KC in general, it is more plausible that someone in the next lower income tier might be able to stretch a little up and the developer might discount a little down and they could make a deal. I would note, though, that deals like two months free are the same kinds of incentives that the NYC developers have tried to use to move their vacant units. Deals like that are a nice sweetener for someone already in or close to that market, but they don't make an otherwise unaffordable unit affordable to someone outside of "stretching" range, because after those two months are up, they still need to start coming up with rent going forward. It's a nice bonus to the tenant able to sign the lease and take advantage of it, but it is not an indication that the market is moving in a genuinely affordable direction.
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Re: Affordable Housing

Post by FangKC »

What to Expect If You Want a New Construction Home in 2021

Rising materials costs, supply chain issues and labor shortages have slowed homebuilding. Will it be fixed soon?
...
The National Association of Realtors reports that the number of existing home sales fell in May by 0.9% compared to May 2020, while the median home price is up year-over-year by 23.6%.
...
On May 7, the price of lumber reached an all-time high of $1,691.73 per thousand board feet, according to Trading Economics. Pre-pandemic lumber prices were commonly around $450 per thousand board feet.

Prices have come down since that peak, to the relief of the industry. As of July 20, the price of lumber was $540.85 per thousand board feet, Trading Economics reports. Still, the high cost of materials hasn’t been resolved yet.
...
A shortage of construction labor has persisted since the Great Recession, when many in the construction industry left permanently due to lack of available work. Since then, however, trends toward college degrees and away from trade schools and on-the-job construction training have reduced the skilled labor force necessary to build homes.

“This is probably the biggest threat to the industry going forward,” LePatner says. There’s no guaranteed solution to the construction labor shortage. Wages will likely have to rise to attract new workers, which will in turn drive up the total cost of new construction.
...
https://realestate.usnews.com/real-esta ... rce=usn_fb
CrossroadsUrbanApts
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Re: Affordable Housing

Post by CrossroadsUrbanApts »

phuqueue wrote: Tue Oct 19, 2021 4:23 pm Again though, my point in raising the example wasn't to say that this is the root cause of the housing shortage, it was only to call into question the belief that the free market is the solution. There is a lot of magical thinking about how the market works that neglects to consider how actors within the market respond to dynamic market conditions. I raised the example of developers holding back vacant apartments as one concrete example of the complications that can arise in the real world market.

Though it's beside the point (at least, it's beside the point that I'm trying to make), to address your specific question, I don't know whether there are any examples of developers in KC holding back vacant inventory, but yes, I would also be surprised -- I mean, if they haven't yet overbuilt in KC, there wouldn't even be vacant units for them to hold back, and prices being more compressed in KC in general, it is more plausible that someone in the next lower income tier might be able to stretch a little up and the developer might discount a little down and they could make a deal. I would note, though, that deals like two months free are the same kinds of incentives that the NYC developers have tried to use to move their vacant units. Deals like that are a nice sweetener for someone already in or close to that market, but they don't make an otherwise unaffordable unit affordable to someone outside of "stretching" range, because after those two months are up, they still need to start coming up with rent going forward. It's a nice bonus to the tenant able to sign the lease and take advantage of it, but it is not an indication that the market is moving in a genuinely affordable direction.
I am far from a free-market dogmatist, but I don't think anyone believes housing is anywhere close to a free market. There are distortions on top of distortions on top of distortions. In some cases, the right policy is to remove some of those distortions (or regulations) rather than introduce new regulations to correct for the old distortions. For example, I think it was a good decision to remove parking minimums for new residential developments in downtown Kansas City when the streetcar was introduced. Not because I am a follower of Milton Friedman (blecch), but because I think city-determined parking minimums distort the housing market in unwise ways (and ultimately hurt affordability).

Earlier you made a statement with which I would partially agree: "All of which brings me back to my conclusion from my earlier post: the housing crisis will require government intervention to resolve, not developers acting unfettered in a free market."

My partial disagreement is that I believe housing developers operating in a somewhat-less-regulated market can solve the housing crisis for, say, the top 85% of the income distribution. I acknowledge the bottom 15% of wage earners (or non-wage earners because of disabilities or other hardships) need direct government intervention because virtually no housing is affordable enough for someone making minimum wage. So I'm fine with public housing (or social housing) being a thing. But regulations put on developers to provide for the 15% (e.g., set-asides, in-lieu fees, etc.) just make it harder for them to do their job to provide good housing options for the 85%. So the housing crisis just gets worse and no one is better off.
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beautyfromashes
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Re: Affordable Housing

Post by beautyfromashes »

There is a housing crisis only if you feel the urban core should be the sole location for cheap rent in the metro.
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FangKC
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Re: Affordable Housing

Post by FangKC »

I tend to agree that it's not good social policy to expect developers to include set percentages of affordable units on the more expensive parcels of land in the Metro (Downtown, Plaza, Brookside). An exception to that would be if HUD provided significant land, or some sort of government-backed bonds, block grants, or guaranteed loan programs to the developer that made it much more possible to build the development. With interest rates so low right now, that's not really the issue.

Some parts of Quality Hill were redeveloped with HUD involvement back in the late 80s/early 90s. A certain percentage of the apartments were affordable units, and renters paid based on their income.

At a certain point, it is up to the government to be involved in providing housing for those who struggle to pay market rent. The market has not solved this problem. This can be done by expanding funding for Section 8 programs and vastly reducing wait times, as well as directly building more housing. Governments should be mindful though of building it near mass transit.
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FangKC
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Re: Affordable Housing

Post by FangKC »

I don't think the Low-Income Housing Tax Credit Program is not well-funded in Missouri and is very competitive. Small property owners would likely have much difficulty accessing this type of financing to help maintain their properties. It's also difficult for them to get bank financing -- especially in neighborhoods where properties are devalued in the banks' view.

As small apartment buildings face demolition, Kansas City loses affordable housing options
...
In the recent Small Apartment Study 2021, Erin Royals and Jacob Wagner at UMKC’s Center for Neighborhoods took a close look at the Central City Economic Development sales tax district (CCED), an area that stretches from 9th Street to Gregory Boulevard between Prospect and Indiana.

Royals says they found that 407 small apartment units in this district were demolished in the last 20 years.

“When you demolish those, you’re demolishing affordable housing,” Royals says.
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Without the funds to fix them up, these apartments increasingly fall into disrepair. When that happens, the owners often decide it’s cheaper to simply tear the whole thing down.
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When these affordable apartments disappear, new ones aren't being built to replace them. The UMKC study found no building permits for small apartments were issued between 2010-2017.
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Tidwell says that the Low-Income Housing Tax Credit is one way investors or potential housing providers can find financial support to repair and remodel aging buildings — specifically those targeted to lower-income households. And she says Kansas City is now exploring other options to incentivize restoration over the wrecking ball.
...

https://www.kcur.org/housing-developmen ... ng-options
phuqueue
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Re: Affordable Housing

Post by phuqueue »

CrossroadsUrbanApts wrote: Fri Oct 22, 2021 1:24 pm
phuqueue wrote: Tue Oct 19, 2021 4:23 pm Again though, my point in raising the example wasn't to say that this is the root cause of the housing shortage, it was only to call into question the belief that the free market is the solution. There is a lot of magical thinking about how the market works that neglects to consider how actors within the market respond to dynamic market conditions. I raised the example of developers holding back vacant apartments as one concrete example of the complications that can arise in the real world market.

Though it's beside the point (at least, it's beside the point that I'm trying to make), to address your specific question, I don't know whether there are any examples of developers in KC holding back vacant inventory, but yes, I would also be surprised -- I mean, if they haven't yet overbuilt in KC, there wouldn't even be vacant units for them to hold back, and prices being more compressed in KC in general, it is more plausible that someone in the next lower income tier might be able to stretch a little up and the developer might discount a little down and they could make a deal. I would note, though, that deals like two months free are the same kinds of incentives that the NYC developers have tried to use to move their vacant units. Deals like that are a nice sweetener for someone already in or close to that market, but they don't make an otherwise unaffordable unit affordable to someone outside of "stretching" range, because after those two months are up, they still need to start coming up with rent going forward. It's a nice bonus to the tenant able to sign the lease and take advantage of it, but it is not an indication that the market is moving in a genuinely affordable direction.
I am far from a free-market dogmatist, but I don't think anyone believes housing is anywhere close to a free market. There are distortions on top of distortions on top of distortions. In some cases, the right policy is to remove some of those distortions (or regulations) rather than introduce new regulations to correct for the old distortions. For example, I think it was a good decision to remove parking minimums for new residential developments in downtown Kansas City when the streetcar was introduced. Not because I am a follower of Milton Friedman (blecch), but because I think city-determined parking minimums distort the housing market in unwise ways (and ultimately hurt affordability).

Earlier you made a statement with which I would partially agree: "All of which brings me back to my conclusion from my earlier post: the housing crisis will require government intervention to resolve, not developers acting unfettered in a free market."

My partial disagreement is that I believe housing developers operating in a somewhat-less-regulated market can solve the housing crisis for, say, the top 85% of the income distribution. I acknowledge the bottom 15% of wage earners (or non-wage earners because of disabilities or other hardships) need direct government intervention because virtually no housing is affordable enough for someone making minimum wage. So I'm fine with public housing (or social housing) being a thing. But regulations put on developers to provide for the 15% (e.g., set-asides, in-lieu fees, etc.) just make it harder for them to do their job to provide good housing options for the 85%. So the housing crisis just gets worse and no one is better off.
This conversation started back in the 2023 city elections thread in response to a twitter thread by/about housing activists in KC confronting the mayor over the specific things actually happening to them in their buildings and their neighborhoods, and the solution that was offered on this board was to just keep building and "leverage the free market." With that context in mind, I'm not sure what your partial disagreement is, since you apparently do agree that a substantial part of the population, to which these housing activists belong, will never be served by "the market." I never came in here to make a general anti-developer NIMBY argument, only to object to the portrayal of housing activists as an incoherent mob and the prescription of building and leveraging the free market as a panacea that will solve all problems. Sure, we need more housing to resolve a housing shortage, and yes, developers are in the business of providing that housing, but they are not in the business of actually trying to drive down housing prices broadly, which would hurt their own bottom line, so we shouldn't expect them to do that. That's not even a judgment against developers or anything, it is just a plain acknowledgment that their goal of generating profit is not aligned with the social goal of housing everyone, even if the means to these two ends appear to overlap to the extent that developers create new housing.
beautyfromashes wrote: Fri Oct 22, 2021 2:18 pm There is a housing crisis only if you feel the urban core should be the sole location for cheap rent in the metro.
This is precisely the kind of take I was attacking in the first thread with that Simpsons gag. The implication here, much as in that post from a few days ago where the other person talked about "shabby, rundown areas where you can find a deal" is that people with lower incomes should be forced out of desirable urban core neighborhoods and into suburban slums to make way for whoever has an extra buck to spend. The urban core need not be the "sole" area where you can find affordable rent, but it shouldn't be transformed into a playground open only to people with money either, and in particular, people who have been in their homes for years or decades shouldn't be forced to vacate because somebody with more money suddenly parachuted in and decided they want that house for themselves.
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