Nightmare on Elm (Trails) Street

by Wayne Congar , CEO of HUTS

In last week’s HUTS newsletter, I asked “Where are the starter homes?”

I outlined the increasing gap between middle income salaries and accessible housing inventory. I also laid out the complete lack of incentives for traditional real estate developers to build for this widening market gap, and how HUTS is set up differently to explore and deliver better housing solutions.

Yesterday, an article in the New York Times titled The Great Compression answered my question about how large-scale housing developers are thinking about exploiting the starter home market.?

And, the results aren’t pretty.

The article highlights Elm Trails, a tract development outside of San Antonio by national homebuilder, Lennar. The homes are somewhat affordable, but also tiny- very tiny.?

Less than 350 square feet, with enough space to sit and sleep, but not much else.?

The author draws a comparison to Levittown, NY, suggesting that Elm Trails can draw a direct genetic lineage from Levitt & Sons’ copy-and-paste post-war subdivisions. This is a tenuous argument. While both developments targeted first time (and cash-light) homebuyers, the original ethos of the two places couldn’t be more different. Levittown was driven by and marketed against a spirit of optimism*, while Elm City is a cavalier play to find the depths of out-priced buyers’ desperation.?

Lennar is testing out just how miserable of a home product people will accept, and how few community amenities they can possibly provide. It’s a cynical place that has repackaged homes that may be worse than single-wide trailers into a site plan; they may be more lifeless than a typical trailer park.

Levittown featured 700 - 1200 SF homes that were efficiently laid out, included sparse but satisfactory spaces for a young family of 4 or more and, most importantly, were more than just a string of houses: they were planned around some civic infrastructure (schools, churches, sometimes a high street), rapid transportation to cities, and defined recreational and commercial-zoned areas.The houses were not freakishly tiny. They were appropriately-scaled, and sported an average square footage per inhabitant that HUTS still looks at as a model today (you can read my article on Appropriately-Sized Housing HERE.)

Certainly not perfect in any way, but Levittowns were planned multi-functional communities where a space to live and a place to make a life were both on offer.

Elm Trails? Not so much.

This was built on what I’d wager was the absolute cheapest stretch of land available within thirty minutes driving distance to San Antonio. While there doesn’t seem to be a school nearby (why would there need to be, you couldn’t house a family in one of the houses), or any mixed retail / commerce / worship / community space? to speak of, there are high-voltage power lines buzzing overhead and access to what looks to be a retention basin for flash flood run-off.?

Elm Trails doesn’t look like a place to start a life, and reminds me more of a place to end one.?

So, Lennar doesn’t have the answer on this question of “Where are the Starter Homes?” or where might they come from. I doubt homebuilding incumbents like D.R. Horton, Toll Brothers, 2Point, or KBHomes are incubating anything all that compelling or novel either.

HUTS doesn’t have all the answers, but we do hold some clear principles that help us evaluate our ideas on the future of the starter home as an asset class. It has to sit within a viable community and it needs to satisfy BOTH the financial constraints of the contemporary first-time home buyer and their growth ambitions, whether that’s building a family, community or wealth.?

One most important things to do when imagining something new and better is to gather recent and obvious examples of what’s bad and worse. I think we can all agree here where Elm Trails fits.

*and, yes, redlining and plenty of mid-century racist and exclusionary policies