How to Build Housing More Affordably
While many real estate professionals see robots as helpful assistants who can make showing homes, maintaining buildings, and connecting with prospects easier, economists aren’t as upbeat about the impact of artificial intelligence on business life. In fact, many worry about a future where robots take over many of our jobs, and in response, some suggest governments examine the idea of a universal basic income. That would basically mean that everyone gets a certain sum of money to ensure their most pressing needs are taken care of.
It’s an interesting idea, but it’s not without its detractors. As you might imagine, such a system could be extremely expensive. Another issue critics often mention is the difficulty of ensuring people spend the money on basic needs, particularly on housing.
Julie Hyman offers a possible solution to this (maybe far-off, maybe not-so-distant) threat in her self-published book, Universal Housing: How to Revitalize Cities and Rebuild the American Dream. Hyman comes from a real estate background, and learned a lot watching her father develop affordable housing units in Allentown, Pa. She posits that, instead of providing universal basic income, why not universal basic housing? It’s an interesting argument, and if you want to learn more, I suggest you take a look at her book.
But since I’m speaking chiefly to an audience of real estate professionals and not policy analysts, I thought I’d share a more practical section of the book (though I’d love to hear your thoughts on universal basic housing and how it might impact the industry, for good or bad). Recognizing that cost is a major factor in the dearth of affordable housing, Hyman offers a list of five techniques gleaned from her father that developers can employ today to create housing units on a smaller budget:
- Repurpose existing buildings: Hyman gives one example of a 60,000 square-foot building her father bought for $200,000 that would have cost some $3,000,000 to build from scratch: “Of course there are parts of the building which cost money to bring up to code, to fix, or to eliminate. But these costs do not compare to the enormous amount you save when you purchase a pre-existing building, as there is a huge creation of value there.”
- Create smaller units: This isn’t for the reason I first assumed, which is that you can fit more units in a building if they’re smaller. Hyman’s father figured out early on that if he was going to rent to lower-income people, the utilities would have to be cheaper too. “If the rent is going to be affordable, everything has to be affordable,” she writes.
- Leverage mass transit: This goes along with the previous tip. If tenants don’t have to pay for parking, gas, or upkeep on a car, this also makes rent easier to come by.
- Splurge on windows: Again, this one comes down to utility costs. While new, energy-efficient windows can be a big expense, they will pay off in the long run in the form of lower heating and cooling bills.
- Ditch the carpeting: Tile or hardwood floors might not be especially cheap compared to industrial carpet, but they can go many years without needing to be replaced. Furthermore, avoiding carpeting allows for less down-time between tenants. “When tenants move out… you are able to go in and turn an apartment around in a few hours by cleaning the hardwood, tile or ceramic floors, cleaning up the appliances and cabinets, and touching up the painting.”