More thoughts on home ownership (part 2 of 2)

So what can we do to fix the problem?

Despite the fact it’s 100 years old and maybe in a little bit rough shape, this could be defined as “affordable” housing. Zillow pegs it at $73,100 and comparable houses in the neighborhood go for less than six figures.

Sussex County, Delaware, where I live, has a problem with affordable housing.

Much of the housing stock in the county, particularly the eastern side closer to the water, is 20 years old or less. It’s a booming area, a destination for retirees who sell their $750k houses in New York, New Jersey, Pennsylvania, or the DMV Capital region to buy a $400k house near the beach and live off the proceeds in this sales-tax free state.

Unfortunately, the infrastructure of that area hasn’t been kept up so beach traffic is horrible this time of year and cars that wander off the six clogged lanes of that part of Coastal Highway (Delaware Route 1) near Rehoboth Beach find themselves tied up in traffic on the two-lane side roads that lead to the housing developments which have sprung up like weeds on what was once farm and pasture land.

Ride along those side roads, though, and you’ll see any number of signs from regional and national homebuilders promoting their wares - a phenomenon noticed by fellow Substacker

Matt Stoller

in a recent piece about the Dallas area, another region that’s booming. (Full disclosure: for two years I worked for one of the larger local homebuilders that has put up several of these subdivisions.)

The question of development has also roiled local government, being a key reason all three available County Council seats turned over at the last election cycle. I noted in my election postmortem that:

Finally, there is one other set of issues Sussex County is talking about, and those intertwined items are growth and affordable housing. As I’ve said several times in the past, most of our county’s growth comes from people who sell their houses in New Jersey, New York, PA, or Maryland and retire here in a nice new house. Unfortunately, they seem to be bringing their awful voting patterns with them as the area east of U.S. 113 is turning a putrid shade of blue electorally. Neither Republican trying to wrest back the seats the party lost in 2022 succeeded, and that part of the county also lost a Republican County Councilman to an anti-growth zealot.

So perhaps it is time to have that conversation, and since the Democrats have talked about affordable housing and infill development, let’s see them put their money where their mouth is. There’s a lot of decent-to-good existing housing stock in Millsboro and Georgetown that could use investment, and the Trump administration could help by cracking down on the illegal immigration which is living ten or twelve to a house in some areas. A little bit of fixing up and that housing stock can be reclaimed, right? Seems like a good local initiative as long as WE set the strings and pay the freight, not the state or federal government.

Last year the county took a step in the affordable housing direction by allowing for accessory dwelling units, but that’s not promoting home ownership because those who own the property also own the ADU, so no equity is being built up by the tenant.

It’s also worth pointing out that, for all the talk about “15 minute cities,” there’s no pent-up desire for that sort of housing arrangement.

When asked about their ideal homes, 76% of (Millennial) respondents expressed a preference for single-family homes. Condominiums, apartments, and mansions lagged far behind in popularity, with 3.6%, 8.6%, and 3.7% favoring them, respectively.

As I noted in Part 1, the deciding factors for my ex and I with our first house were affordability and location, specifically being in a particular school district. It didn’t have to be a large house nor did it have to be a new house, and that may be the key.

When you think about it, those local developments that are older than 20 years old were the first places our waves of retirees moved into, and that cohort is - to put it bluntly - dying off, leaving the houses to the kids and/or the reverse mortgage company. Those houses could be affordable if the new owners don’t mind perhaps a bit of work, but that would be true of any house.

Yet the biggest hurdles for home ownership seem to be amassing the down payment and dealing with a mortgage that may be more than $2,000 a month thanks to increased interest rates. (That doesn’t include potential HOA fees.) And new houses? They’re being built to a much larger square footage than houses of yesteryear - the house pictured above is 1,100 square feet on two stories when most new homes begin at 1,200 square feet and often run more than 1,500 square feet. (The house I own now is 1,512 square feet excluding the garage, with 3 bedrooms and 2 baths.)

Recently I was in a brand new house that was only about 1,200 square feet but would be a good starter home - 3 bedrooms (2 of which were fairly small, but fine for little kids), 2 baths, no garage - and the price was $260,000!

But in the builder’s defense, just a 3/4 acre lot around here, out in the boonies, will run you $75k and putting in the septic creeps you up toward six figures - and that’s before you lay the first block of the foundation. If anything, there needs to be some entity that encourages the purchase of existing houses where all these needs have already been addressed.

However, it would be interesting as a test case to build a subdivision with modest houses of maybe 1,200 - 1,500 square feet on half-acre lots of about 150’ x 150’ with a package septic system that serves all the houses - or close enough to a town where it ties into their sanitary sewer. (It would be a small subdivision, maybe 10 lots.) Incentivize that investment just to see how cheaply the houses would sell for.

The dream of home ownership shouldn’t have become unattainable. It almost seems wasteful to me that we let good housing stock become fodder for rentals while new homes are built for two retirees. Maybe locally we can come up with a good solution.

Yet if you’re not afraid to move and have a job which allows for remote work (or a trade that can be done anywhere), there’s nothing wrong with my old hometown (or other places with similarly priced homes) when it comes to affordable housing, either. Imagine a nice older home and a mortgage that may or may not tickle four figures. There are places in this country where this can be achieved.

The American Dream is still attainable, but a few changes need to be made on everyone’s part to create a better opportunity for Gen Z to pursue it.

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