Three disruptive ideas to address the affordable housing shortage

There is an increasing shortage of affordable housing in almost every major metropolitan area in the US. It’s also fair to say that in many of the markets where affordable housing is in short supply, housing of any kind is hard to find.?

When overall housing demand outpaces supply, housing prices go up, as does the competition for the most “affordable” units. This is certainly the case here in Boston, where we have been trying to accelerate the construction of new housing units for years, but without much success. Back in 2014, former Mayor Walsh released his “Housing a Changing City: Boston 2030 ” report identifying a need for 53,000 new housing units. A decade later, Boston is still dealing with a crippling shortage of housing both in the city and across the region, with the affordable housing supply getting hit the hardest.

According to the Boston Housing Authority, “in Boston alone, the demand for affordable housing is at a high. As of Sept. 19, 2023, there were 42,245 applicants on BHA's combined waitlists across all of its housing programs.” One big reason there is such a long waitlist is that vacancy rates for rental units in Boston are currently under 1%. By comparison, a healthy balance of supply and demand would yield a vacancy rate around 6%. As a result people across all income levels are competing for an extremely limited supply of housing, driving prices up. This means that Boston’s existing housing stock, a significant amount of which is older and should (in theory) be more affordable, continues to get more and more expensive. This also means that landlords don’t need to make improvements to collect more rent, so the quality of our existing housing stock is in decline.

If the data clearly suggests high demand in Boston is for affordable units, why can’t we build them? A primary challenge for potential affordable housing developers in cities like Boston is the rising construction costs driven by pandemic-induced supply chain and labor shortages. Even though the city has introduced new linkage policies and zoning incentives to try to stimulate the construction of more affordable housing, these financial barriers appear to be too high to overcome.

A recent Boston Globe article titled “The $600,000 Problem ” estimates that it currently costs between $500,000-$600,000 to build a single unit of housing in the city of Boston. “All the rezoning in the world won’t spark a wave of new housing if people can’t make money building it. And, right now, some 30 developers, construction executives, architects, and policymakers told the Globe Spotlight Team, they can’t make the numbers work. It is a troubling conclusion that leads some in the industry to wonder if it’s time to boldly rethink how we build housing to begin with.”

What are some of the ways we can “boldly rethink how we build housing”? Here are three ideas that could move the needle a little further towards our goals here in Boston:

#1 Double down on student housing.

Boston has been trying for years to influence institutions of higher education to build enough housing for their students. According to the City of Boston 2022 Student Housing Trends Report , “of the more than 38,000 students that live off campus (not at home), 65% of them are concentrated in Allston, Brighton, Mission Hill and Fenway, placing significant pressure on the rental markets in these neighborhoods.”

That’s 38,000 students living in a city that has 42,245 applicants wait-listed for affordable housing. In spite of the fact that there is a vast shortage of student housing on Boston campuses, a little under 3,000 net new student dorm rooms have been built in Boston since 2014.?

Simply put, if we build more student housing to meet current demand, we would free up existing rental housing stock to non-students in need of affordable housing. If the free market is not on its own able to satisfy the demand for new student housing demand, then the City needs to take a stronger position in negotiating its payment-in-lieu of taxes (PILOT) agreements with its 21 colleges and universities. These institutions do not pay property taxes (a primary source of funding for affordable housing) and instead make negotiated payments as cash donations to the City or, more commonly, in the form of community benefits credits. Requiring institutions to build more housing for their students as part of their community benefit agreements would be a big step towards increasing our affordable housing supply.

#2 Provide more pathways towards home ownership.

We can also look beyond rental housing to find ways to make home ownership more accessible as a way of addressing our affordable housing needs. This is important because the increasing costs of rent make it hard for anyone to save enough money for a down payment on a mortgage, meaning that home ownership is an impossible dream for many people.?

For example, using MIT’s living wage calculator, a family of four with a household income of $140,000 can afford approximately $3,500 a month in rent, but average rents in Boston for a 2BR apartment are around $4,000 per month. And, according to the Joint Center for Housing Studies at Harvard, a household income just over $180,000 is necessary to afford to buy a median-priced home in Greater Boston. As a result, the cost burden of housing is disproportionately high for many families—well over the widely accepted rule-of-thumb that 30% of gross income should be budgeted for housing costs.?

There are, however, experimental subsidy programs attempting to close this gap. Let’s again look at a family of four looking for housing with an annual income of $140,000, but this time they are participating in the relatively new First Home Program created by the Boston Housing Authority. Rather than subsidizing rent costs, this program offers up to $75,000 towards the purchase of a home. This means a mortgage for a family of 4 with a $140k household income and a $75k grant for down payment can afford a unit that costs $625k, with a monthly payment around $3,500 using a 30-year FHA loan with 6.5% interest rate.

In other words, this hypothetical family is not only paying less per month towards housing, but they are also making an investment that will pay them back rather than throwing their money away towards rent. The good news is that this is exactly the kind of story that can now be told by the 29 families (and new homeowners) who participated in the BHA’s First Home Program last year. We were honored to host a celebration for these families in our office space recently, and I believe this is an important and innovative program that is set to grow over the coming years.

#3 Reexamine building codes, not just the zoning code.

There’s been a great deal of focus on zoning in American cities in recent years—from allowing accessory units to increasing as-of-right densities near transit to eliminating single family zoning altogether—but seemingly less focus on building codes themselves. Zoning is a good tool to regulate what gets built, but it doesn’t tell us much about how things get built. And, understanding how things get built is an important first step towards understanding what ultimately gets built (and what doesn’t).

An historic example of how building codes can shape entire neighborhoods is the triple-decker, which is prevalent here in Boston. Tens of thousands of these “stacked flats” were built in the early 1900's before being banned as a building typology due to code regulations that arbitrarily prevented the construction of any ‘wooden tenement’ in which ‘cooking shall be done above the second floor.’

As we now understand it, this code change was motivated by politics rather than health and safety since this affordable housing type was popular in immigrant neighborhoods. Today, triple-deckers may now finally be returning to favor—see the City of Boston’s RFP for a new take on the triple-decker building typology.

Part of the reason the triple-decker is getting so much renewed attention is its smaller scale—it looks and feels like a house and it can be built on small, urban lots. Why, then, are most new apartment buildings today so large and unwieldy? Everything we do as architects seems to be about mitigating scale…adding stoops, stepping back the upper levels, or modulating the facade where possible. Why can’t we just design the kinds of housing in our cities that we used to?

Again, building codes designed to address fire and life safety are the unlikely culprit here. Modern building codes require that all residential buildings above three stories in the US have two exit stairs. This one requirement limits the arrangement of corridors and apartment units, which generates larger floor plans, and ultimately, larger buildings.

Here’s an excellent video by Vancouver’s non-profit think tank called the Urbanarium that illustrates how this single building code element heavily influences the physical form of multifamily housing. If we can innovate ways to update our building codes, we will be able to welcome new design ideas to the table that may also lower some of the economic hurdles to building new housing in cities.

In conclusion, the demand for affordable housing in cities like Boston continues to increase as housing across all price points is also in short supply. Through creative and multifaceted approaches to student housing, home ownership, and building codes, we can begin to alleviate the pressures of the current affordable housing crisis. It is crucial to recognize that housing is a fundamental right, and we must collaborate across sectors to benefit all residents. By working together, we can create diverse cities where everyone has a place to call home.