This month's cover story tackles the lack of affordable housing in the U.S. and what some builders are doing about it (see “Out of Reach,” page 90). You may remember that Builder has written about the affordability crisis several times before. A story in 1990 focused on the problem of homelessness and the need for affordable rental units. A special issue in 1999 described the plight of seniors, single parents, and minorities priced out of the for-sale housing market. In 2003, we reported on the scarcity of workforce housing, with even hardworking middle-class families unable to become homeowners, at least anywhere in proximity to their work. So what's changed? Why are we looking at this issue yet again?
How about this for a reason: In the suburbs of Washington, D.C., housing prices have risen 12 times faster than household incomes. Or this: Three-quarters of all households in California cannot afford an entry-level home priced at $480,670, and only about one-third of all the households in Florida can afford a median-priced home there compared with 69 percent in 1999. Or: In a number of areas, families with household incomes of more than $100,000 are now eligible for housing assistance. Or maybe this: Some economists and policymakers say that the long-term viability of the U.S. economy may hinge on the provision of affordable housing—not only because housing is urgently needed to shelter our growing population and to give our country's workers places to live within reasonable commuting distance of their jobs, but also because our economy depends on the health of the housing industry. And the lack of affordable homes is one reason why the industry is having trouble recovering from the current downturn.
There seems to be no question that you know there is a crisis. Two-thirds of the respondents to our reader poll acknowledge it, and about 40 percent see building affordable homes as a market opportunity. But what keeps most of you from seizing that opportunity is also easily understood. The list of hurdles is almost endless, and every builder knows them well: exorbitant land costs, outdated zoning regulations, difficulties with higher density, sky-high impact fees, nimbyism, and so on and so on.
But builders are nothing if not resourceful, and many of your colleagues are meeting these challenges head on and finding ways to get over or around them. Take land, for example. All over the country, home building companies—big and small—are partnering with local jurisdictions, nonprofits, and community development agencies to obtain low-cost land in exchange for building affordable homes. Others are buying and developing raw land with municipal help that reduces or even eliminates the cost of entitlements and infrastructure. Still others are taking the unorthodox approach of working with land trusts: The trusts, in some cases, retain ownership of the land, leasing it to the buyers, who purchase only the home. This scenario has the added benefit of ensuring that the houses will be more affordable for years to come.
In addition, builders are using every design trick in the book to make their houses more affordable. Smaller lots, higher density, and more efficient construction techniques all add up to savings for both builders and buyers. It's even possible to promise continued affordability after purchase with high-performance and energy-efficient building practices (see “Affordable by Design,” page 134). And since none of this will help if buyers can't find financing, some companies are coming up with innovative down-payment and mortgage solutions (and no, not the ones the subprime lenders were pushing) to assist folks who want to buy—and keep—their homes (see “Crunching the Numbers,” page 126).
In fact, opportunities abound for building affordable homes—while still making a profit. I urge you to consider using the approaches outlined here to see what you can do about providing homes for a large and underserved segment of our population. The industry and the economy—not to mention your business—may depend on it.
Denise Dersin, Editor in Chief
Learn more about markets featured in this article: Washington, DC.