Could this be a housing solution?

Rather than complain, how about a suggestion for affordability?

This looks like a perfectly fine house for folks to start out in. Might need a bit of TLC (like the roof and latticework under the front porch) but the bones are there. Photo by Phil Hearing on Unsplash

Young people, especially in these parts, are complaining about how housing is too expensive and they can’t find a starter home. This thought comes up when I drive by a brand-new house that was just finished down the road a piece from me. It turns out, having looked at it on Zillow, that it’s the exact same square footage as mine, but with no garage, on just slightly over an acre. The price? $349,900.

At 6% interest and based on a 10% down payment (good luck for a young person to have $35k laying around) the monthly mortgage would be $2,240. That’s still quite a bit of a monthly payment.

Like I said in the tagline, it got me to pondering, and the what-if started when I thought about the zoning codes locally that dictate lots in rural areas be larger than 1/2 acre - in practice, most are 3/4 acre. That’s a nice sized yard to be sure, but it’s also making lots around here go for $50-$70k, not counting the septic costs.

My brainstorm continued. What if a town like Laurel, my adopted hometown (or at least zip code) could get ahold of a nearby parcel along a collector road that was 550’ deep x 350’ wide, which, by my public-school math, is about 4.4 acres. Take that property and subdivide it with a 50’ wide street right of way and utility easement right down the center and make the rest into 10 lots, 100’ wide x 150’ deep. (That’s about 1/3 acre apiece.) I figure that parcel would cost about $300,000, more or less. (It could also be subdivided from a larger parcel, with the rest being sold or held.)

Once you have ten lots, come up with a good, efficient floor plan or two that can be used to build ten 3-bedroom, 2-bath houses with an attached garage that fits on a footprint of 70’ x 28’. That’s a 1400 square foot house (50’ x 28’) with an attached 20’ x 24’ garage. (You could use the floor plan of my house, which is a relatively typical ranch home, with a few nips and tucks to strip 4’ out of it.) Having just one or two plans leads to economy of scale.

Now comes the fun part. The idea behind building these houses in such a fashion (such as a modular home) is to cut down on construction costs. The town could waive or reduce their water and sewer tap fees so the homeowners could enjoy city water, as a large part of the price of building a home in this area comes in the form of constructing the septic system. Ideally, these house and lot packages would retail for about $200,000, which under an affordability scenario would enable a 5% down payment ($10,000) and a monthly mortgage in the range of $1,440.

There would be two restrictions on the property. One is that buyers would have to be couples under the age of 35, because these are intended to be starter homes for a family. By that same token, the first sale of the property (and any subsequent ones for a certain period, say, 10 years after first occupancy) would be restricted to the same group (couples under 35) and renting them out would not be allowed. The idea is that the homes remain as an affordable way to encourage ownership and build equity, and the homes would be a neighborhood for young couples, at least for the first decade or so. Since there are areas and developments which are deed-restricted for ages 55 and over, the inverse should be allowable as well.

And since the road was a straight lane, if the program was successful the town could purchase or plat out another similar parcel and extend the street another 500 feet to a new dedicated cross-street - lather, rinse, and repeat a cross-street every 1,000 feet and perhaps the next street over being a little over 300 feet away, leaving a bit of space for a drainage or utility easement. That would create a block of 20 houses, which is a critical mass for being neighborly and having a block party!

It seems to me that this is an area where local government can help out by investing in the civil engineering work while encouraging home ownership and creating a stable neighborhood of similarly minded people who are just starting out. I wasn’t around when the Levittowns of the world were being built after World War 2, but I’m betting those neighborhoods worked well to start because those who bought homes there had a lot in common.

Let’s look at who benefits here. It’s not unknown for a town to purchase a large parcel of land then subdivide it in order to install infrastructure and build an industrial park, figuring the jobs created would provide revenue for the town and eventually pay back the investment. I’m just advocating this on a smaller scale. Towns are always looking for people to invest in them; I’m just asking that they plant the seed by spending maybe $300,000 for the land and maybe that amount again to extend water and sewer lines and build the roads. Even if they go all-in and it costs the full $2 million to develop the 10 lots and build the houses, they’re gaining 10 sets of taxpaying residences and addressing a critical need.

Better still, it’s a local investment that can be tailored to the specific area. I’m just using Laurel as an example because it so happens they have an entity which does this - but not everyone wants to live in midtown Laurel or in a duplex. A survey I cited last year when I talked about this subject before noted that over 3/4 of Millennial respondents preferred a house and lot similar to that which I’m describing. It seems like the expertise is there, just the will is lacking.

Having the local government behind this also helps with cutting red tape, which is important given all the hoops they seem to make a private developer go through. I’m not saying it has to be a public entity, but unfortunately, people who build houses have to work with the profit motive and right now half-million dollar 3,000 square foot houses seem to be the most economically viable in this region. (This is true when the modest little house down the road on an acre is still $350k, which presumably gives the developer some return on investment.) That’s great for the retiring Boomers and Gen X, but not so good for people just starting out.

If we want to encourage home ownership, policy on a local level can help. This is just a brainstorm to start discussion.

In the meantime, though, you can Buy Me a Coffee, since I have a page there.