Housing Affordability and the Demise of Starter Homes

Wells House / Drawing. Architects: Tecton, c.1951, ink on paper. Technical drawing of elevation of the balcony side of Wells House, Spa Green. Photographed at the V&A’s “A Home for All – Six Experiments in Social Housing” exhibition. Drawing from the RIBA collections. V&A, RBKC, London. Images George Rex (CC BY-NC-ND 2.0)

September 25, 2022

Today’s NY Times included a good article on the demise of the “starter home” in the United States.

Whatever Happened to the Starter Home? – The New York Times (nytimes.com)

This article struck a chord with me because of my work on affordable housing – which is harder to find and has increasingly fueled a housing crisis. The cause? Economics plays a role. Construction and land costs have increased. Regulation arguably plays an even bigger role, with local governments increasing permit fees and specifying things such as lot size and use of particular building materials.

Zoning rules play a factor as well as the NIMBY approach taken by some communities. To illustrate, several years ago I worked with a developer to explore an adaptave reuse of an old, abandoned historic building. From a development standpoint it made sense to use low-income housing tax credits as part of the capital stack. That would have involved rent restrictions on available units. The neighborhood exploded — they did not want “those kind” of people moving into their community. Ultimately that project died largely because of neighborhood opposition. And about 80 units of affordable housing were not available.

There is no shortage of demand for affordable housing. There is a significant shortage of supply, along with a mismatch in the type of housing inventory available. Changes in land use policy could help bridge that shortfall by making it easier to build smaller, affordable starter homes.