Affordable Housing shortage in Detroit

[O3H]

What side of the fence, too many homes, not enough homes.
With nearly 81,000 off-market vacant units, the city of Detroit has housing stock.
Affordable is the question of the day.

https://www.detroitnews.com/story/business/2019/04/29/michigan-faces-shortage-affordable-homes/3519677002/

[renf]

In many of the nation's cities, there is a major shortage of affordable housing. This is a substantial challenge. Fortunately, we have a Detroit man, Dr. Carson, as the nation's leader for housing policy. I wonder
what innovative proposals he will put forth to solve this problem of
insufficient moderately priced housing. We know what the federal government did with housing policy just after World War II when the nation invaded and conquered the "crab grass frontier."

[Richard]

Is it a shortage of housing or expectations.

The examples given was somebody looking to upgrade to 1.5 acres and the average new build being 2600 sqft,what percentage of the market does that really cover.

The good thing in the city of Detroit is that it forces potential buyers to look at homes in neighborhoods that they would not normally look at,and is it really an issue of people unable to qualify because they are looking in the $350,000 plus range?

It used to be that existing homeowners would find it more feasible to add rooms to their existing home verses selling and buying another for added space.

I wonder if the programs that are incentives are actually driving up costs.

[oladub]

"Affordable housing" is a politically loaded term. High property taxes, restrictions on building, zoning, and licensing all make housing less affordable. Just wait until interest rates return to their historic norm. A lowering of our standard of living since 1978 combined with more upscale housing expectations and mandated requirements do make housing less affordable. "Affordable housing" though has more to do with subsidizing housing and corporations profiting from this arrangement. Paying off student loans has ironically even been pitched as necessary so young people can afford to borrow money for their first house. In other words, an indirect subsidy to the housing industry. The USSR's constitution gave everyone a right to housing. It was pro-active in the way Obama wanted to change our Constitution. If we want to have even more of a housing problem, copy the Soviet Union or California's housing initiatives.

[401don]

Fortunately, we have a Detroit man, Dr. Carson, as the nation's leader for housing policy. I wonder
what innovative proposals he will put forth to solve this problem of
insufficient moderately priced housing."

I can't tell if this is sarcasm or not, although clearly it should be.

[Gistok]

I can't tell if this is sarcasm or not, although clearly it should be.

401don... you and I were on the same page with that comment.... maybe he should have added "such as all the new educational innovations that Betsy DeVos has given us"....

[313WX]

In many of the nation's cities, there is a major shortage of affordable housing. This is a substantial challenge. Fortunately, we have a Detroit man, Dr. Carson, as the nation's leader for housing policy. I wonder
what innovative proposals he will put forth to solve this problem of
insufficient moderately priced housing. We know what the federal government did with housing policy just after World War II when the nation invaded and conquered the "crab grass frontier."

You dropped the "s" and "/s" [[begin and end sarcasm) from the bolded part of your post.

[O3H]

I live in Warren in a house my parents bought for $15,000 in early 1960's
Most of the neighborhood today is in a range $160,000 - $210,000 approx.

Buying power is a issue. Wages are an issue. Housing market is often whack

[Hermod]

One of the problems on housing is expectations. In 1941, my parents bought a brick two bedroom one bath bungalow [[with expansible attic) on Nottingham in NE Detroit for $3,500. Most people with two kids would turn their nose up at buying such a house today. After the war, my father had the attic finished into two more bedrooms and we had seven people n the house [[still only one bathroom).

[Johnnny5]

One thing that might help is changing property tax laws and square footage restrictions to encourage the building of smaller homes [[On smaller lots) as opposed to unnecessarily large ones. Family size is shrinking and there are more Americans living alone than ever before, but homes just keep getting bigger and bigger. The average sized home being built today is now over 2000 square feet! They cost more to build, cost more to heat/cool and more to maintain. They also require more labor and materials to build which is going to be a bigger concern going forward.

What if we instituted a statewide one time $2500 [[Or whatever number makes sense) tax credit to those buyers of a new home under 1500 square feet, and offset it by placing a $2500 fee on homes built over 1500 square feet? The credit would encourage the construction of smaller "starter" homes and infill construction in Detroit and the inner suburbs. At the same time the fee on larger homes may discourage wasteful spending, and might help pull builders away from the higher end of the market.

[Meddle]

^^ I'd rather see utility rates adjusted by usage. You want a 5,000 SqFt mini palace with a heated pool, 6 bathrooms and 3 kitchens cooled to 68 degrees in Summer and heated to 78 degrees in Winter? Pay for it. Extra fees for water and sewerage over 1,000 gallons/mo. Extra fees for electric and gas over some minimal base consumption [[ie 1,000 KwHrs for electric).

Total utilities for a typical 1,100 SqFt bungalow with one bathroom, one kitchen and no A/C could be under $100/mo in most cases.

Taxes too. Property tax rates would double over 2,500 SqFt and triple over 5,000 while they would drop to near nothing [[$500/yr or less) for the basic bungalow.

[Richard]

^ there ya go,implement a size matters tax of sorts.

Think of the possibilities,moped versus Harley Davidson,Prius verses pick up truck,skinny people receive tax breaks, the list goes on,think of all that revenue the state could collect that is just sitting there.

[Johnnny5]

^^ I'd rather see utility rates adjusted by usage. You want a 5,000 SqFt mini palace with a heated pool, 6 bathrooms and 3 kitchens cooled to 68 degrees in Summer and heated to 78 degrees in Winter? Pay for it. Extra fees for water and sewerage over 1,000 gallons/mo. Extra fees for electric and gas over some minimal base consumption [[ie 1,000 KwHrs for electric).

Total utilities for a typical 1,100 SqFt bungalow with one bathroom, one kitchen and no A/C could be under $100/mo in most cases.

Taxes too. Property tax rates would double over 2,500 SqFt and triple over 5,000 while they would drop to near nothing [[$500/yr or less) for the basic bungalow.

That's more of a plan to punish those that already own large homes, not encourage people to build smaller ones. There would be a lot of unintended consequences, one of which would be the complete abandonment of large, historic homes in Detroit.


I like the idea of a one time building credit/fee as it may be able to sneak though without being considered a property tax increase, and would not negatively affect existing homeowners. It would also be totally self supporting, and 100% optional. If you don't want to pay it, keep your new build under 1500 square feet.

My grandmother raised 11 kids in a 750 square foot home, so to me the idea that one actually requires more than 1500 square feet of living space for anything other than their own personal desire is simply ridiculous.

[O3H]

Vacancy rates serve as a critical indicator of what is going to happen to housing affordability.

http://eyeonhousing.org/2019/02/what...ge-of-housing/

Detroit might have cheap houses, BUT do people want to be there ?

[Wesley Mouch]

...snip...

What if we instituted a statewide one time $2500 [[Or whatever number makes sense) tax credit to those buyers of a new home under 1500 square feet, and offset it by placing a $2500 fee on homes built over 1500 square feet? The credit would encourage the construction of smaller "starter" homes and infill construction in Detroit and the inner suburbs. At the same time the fee on larger homes may discourage wasteful spending, and might help pull builders away from the higher end of the market.

Let's discuss the effects of this:

1) Tax on big homes. Raises the cost of a big home. Thus, fewer big homes will be built than otherwise. People with more money will stay in their current homes just a little longer. Or moving to Florida a few months sooner. Since they don't vacate their current smaller home, the price of existing small homes would increase.

Effect: Less affordable smaller homes.

2) Rebate for small home construction: Small home shoppers have an extra $2,500 in their pocket. They can afford, say, $400/mo. mortgage payment. The extra money let's them pay $440/mo. Sellers know they can get more for their small homes... so....

Effect: Less affordable smaller homes.

[Wesley Mouch]

...snip...
Detroit might have cheap houses, BUT do people want to be there ?

Affordable housing does not mean you get to live where you want.

As others have said, its mostly a political term, a bit like Apple Pie. Who doesn't like Apple Pie, Who doesn't like Affordable Housing.

Yet we won't take the necessary steps. We insist on allowing single-family zoning. We give planning departments immense power. We have 'community voices' a chance to weigh in. We mandate minimum wages [[which keep out undesirables from our trades). We mandate occupational licensing. We create construction inspection bureaucracy at too many steps*. We increase material costs by adding taxes/tariffs to imported supplies. We require apartments to have parking spaces. We require elevators in two-story apartment buildings [[rather than locating persons with mobility limits to the first floor). And a thousand more costs by adding a nickel here [[a plug every 6 inches) and mandating minimum apartment sizes [[see Seattle). We limit construction beyond 'urban boundaries' [[Portland). We provide subsidies to first-time homebuyers.

Each of these things by themselves delivers a good [[more outlets/fewer fires -- tariffs support local jobs at higher wages rather than jobs in China). Each requirement has a good reason. And certainly many are valuable.

But...

The end result is housing becomes expensive. Its mostly because we have decided we want certain other things more.

*In some jurisdictions in the world, building inspection is done by licensed, bonded contractors who build the house. A plumber agrees to abide by the codes, and if found not to are severely fined. Occasional inspections. High fines. There are other ways to do things than hiring teams of unqualified inspectors who have never installed a sink in their life -- and are more interested in power trips.

[Richard]

Vacancy rates serve as a critical indicator of what is going to happen to housing affordability.

http://eyeonhousing.org/2019/02/what...ge-of-housing/

Detroit might have cheap houses, BUT do people want to be there ?

That is also based on perception,I live in a 1920s bungalow that I bought in the crash for $6000 and rebuilt it,when I list things for sale people are sometimes scared to come to the neighborhood,I never have any problems,anything I could want for commercially or personal is within 1 mile with little traffic worries.

What some people call ghetto in most cases if you are not involved in certain things nobody really bothers you.

We also have what is called “impact fees” if you are building new it is a one time fee that is supposed to go to infrastructure,it starts at about $12,000 and goes up from there depending on SQFT,but it just gets added to the price of the new house.

From my house out 50 miles you cannot go anywhere without seeing new 600 to 1000 home subdivisions being built and 200 to 300 apartment units,affordable houses start at $350,000.

All of your builders are down here creating sprawl like crack cocaine.

Where is everybody coming from and where are they getting the money to buy this stuff?

Duggan implemented the 20% rule where new multi family must contain 20% market rate or affordable housing,but that is time sensitive and the builders will just remarket the property at full market value when the time runs out.

The downside is less multi family will get built.

Like others have posted,people want everything,2500 sqft house with granite countertops and high scale appliances and when they cannot afford the options they say the market is not affordable.

Before 2004 I used to build simple no frills 3 bedroom 1200 sqft homes and sell them for $83,000 at the time nicely appointed homes were in the $120 to $150,000 range.

Very few wanted a $83 k home they wanted the $150 k home,they would pay the extra $50,000 for the privilege of having fancy window dressing.

The only people that want affordable homes are those who cannot afford one,the rest will pay top dollar because they can today,not much thought is given to what happens tomorrow if they cannot.

[O3H]

How many people actually have a had a SINGLE job for 10, 20, 30 years ?
Being safe, stable, with never ending income for decades is a thing of the past

[Richard]

^ it never was in the past either,what we are experiencing now is not even a taste of how it was,we do not get a free pass on complaining about affordable housing and lack of jobs while we continue to support everybody else in the world instead of our own neighbors.

It is not rocket science,when we reach for that made in China cheap product on the shelf we just saved a dollar at the cost of a neighbor,nice trade off hugh.

We are just reaping what we sowed,no point in complaining about it without getting serious about doing something about it.

[Danny]

White folks and its developers who want to come to Detroit to building their fancy George Jetson-esque supercondos, mega lofts and ultra-apartments may not want to add subsidized housing. If they do, the result of the matters is fewer affordable housing units for mostly those 55 years and up.

Those multi million dollar developers are in the real estate market to buy or sell building capital. Not to start a full subsidize market with cheap rents for people who are living on Social Security, welfare checks and food stamps.

Downtown Detroit, Midtown and the New Center Area are the hot spot for prime development opportunity. The what's left of the ghettos and slums of Detroit belongs to the riff-raffs until they will be put out and hit Eight Mile Rd.

[Richard]

^ and that is exactly how it will play out.

When I was in Orlando in the 80s There was 3000 people a day moving into the state,we used to buy houses in the downtown and divide it up into sleeping rooms.

$50 a week got you a bedroom and shared bathroom,no different then during the depression or when the cities were in decline,large homes were divided up,look back when there were boarding houses in the 20s 30s 40s 50s they were all modes of cheap housing for singles later they were renamed flop houses and shunned.

I bought a 1920s house in Tampa that was two story 8 bedrooms,the second floor had a hallway down the center,men on the left women on the right,4 residents per bedroom.

It was cheap affordable housing for the single cigar factory workers.

They showered,ate and socialized at the social club,a bedroom was just a place for one to lay thier head.

Off shoots of that are being built by a private company,they have 3 so far new built 10 bedroom houses,$500 a month gets you a bedroom and use of the common space.

People say everybody had a house in the 50s etc but they forget the country was in a 10 year depression then a world war,the 50s was pent up demand being released and even at that,like others have posted,most blue collar workers bought houses where the children shared bedrooms,I grew up sharing a bedroom with two other brothers.

Now most feel that every child needs a separate bedroom,which adds sqft and costs more which give an excuse that there is no affordable housing.

Used to be a single person or couple would buy a cheap little starter home and as the family grew they sold and used the equity to buy a bigger house.

Now it’s gotta be that dream house right off the bat and if they cannot afford it,it is back to the there is no housing options again.

There are alway options,they may not be ideal situations but as a starting point they are there,but it is easier to just say they are not there.

When you get to places like in California and Seattle where you have 10s of thousands sleeping in the streets then you have a problem,that is a lack of leadership generated issue and not a lack of options issue.

It is not a problem centered on a particular city or a problem that has not been going on for centuries,nobody has been able to come up with an ideal solution in 1000 years.

The Hispanics,Asians,and others come close when they fit 3 families in a 2 bedroom house and in Japan it is not uncommon to find generations living in the same house.

We view the 30 year old living in thier parents basement as a negative but if it is okay with the parents and they have the room and the person is contributing to the household expenses how is that a negative?

We are actually one of the few countries that view not leaving the nest at age 18 as a form of a personal failure.

[Atticus]

The aspect that never gets mentioned in “affordable housing” is that the resident [[in most cases) needs to have an income large enough to pay for the necessary ongoing maintenance of the structure. Things like basic repairs, and having enough money to replace the roof, furnace, etc. as needed.

There is a very small percentage of the population that has the skill and time these days to [[on their own) properly maintain their home without paying someone else to do the service. And chances are, if the person needs affordable housing, they dont have enough money to pay for the necessary maintenance services. Yes I realize some can do it “on their own”, but then again if someone has that skill anyway, there is a correlation in being not in need of affordable housing.

Point being, there is an income level threshold for which people living below it shouldn’t be provided subsidies for living in single detached structures, because they can’t afford to keep that structure from falling into disrepair. The policy should instead focus on condominium style housing arrangements, which are easier to maintain and whose repair costs can be pooled across many residences. Unfortunately there are far to few condominium structures here compared to places like Canada, Europe, etc.

And taking it further, placing people who can’t afford to maintain their homes into healthy neighborhoods is not always good either. As eventually that deferred maintenance creates a home that is an eyesore. And then the eyesore brings down the whole value of the neighborhood, creating even more problems.

[casscorridor]

Detroit metro overall is still one of the most affordable in the nation. But 'affordable' as a concept is problematic, because there are so many factors to consider what makes something affordable. Yes, you may be able to buy a decent house cheaply in a Detroit suburb, but you will be isolated and bored and have to drive far to get to everything including work. If you want to live near Downtown Detroit, however, there is a real shortage of affordable, decent housing. So now we're seeing outrageous prices for Downtown housing that you'd see in much larger and more expensive cities because the supply is so low. There needs to be more middle class housing options in the center of Detroit, otherwise there will end up being this huge divide between a very wealthy center surrounded by destitute neighborhoods. It just doesn't seem sustainable in the long run to have that sort of inequality.

[Richard]

Detroit seems to be unique in that aspect with the amount of largely abandoned space,so it does really have that opportunity to plan for the different options before it runs out of advailable land.

Even at that given the current construction rates and without going deep into due diligence that at the very minimum to build and sell new it would be in the $150 to $200k range but even at that transit options would still have to be in place.

Hantz and the tree farm,I would guess that the intent was for future development,the question being what is thier target market where it becomes feasible to build there.

I am thinking in the $300 to $400k range.

It appears there is a demand but is the demand based on keeping prices high? The flip side,demand would bring new development,but I think it will boil down to when the demand peaks and stalls then it will be a rush and the affordable housing aspect,such as it is,will go along the wayside.

Interesting that by me anyways,cities are getting away and outright banning duplexes in long established neighborhoods based mostly on landlords that do not screen tenants and they literally destroy neighborhoods.

The city really needs to be looking at all options at this stage before it gets out of hand like it has in other cities.

[O3H]

How does buying a house for $20,000 and then putting $50,000
into it , to renovate UPwards into the modern age, make it affordable ?
Who is going to do that on $15/hr or $20/hr payscale .