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http://www.strongtowns.org/journal/2016/9/22/...apartment
I have been spending some time in San Francisco, and of course everyone
complains about the housing prices. This is causing real problems -- even
high-paying employers like Apple or Google find that their employees have
nowhere to live, and often face both punishing commutes and extreme rents and
mortgages. And if you are not in the Top 5% ... sorry. Maybe you should sell
your company to Oracle?
So, I am presenting a different vision: the possibility of a (very small)
studio apartment, in one of the better locations of San Francisco (actually
SF Metro, i.e., "Bay Area"), that you can purchase for $50,000, or
perhaps rent for $400-$500 a month. This is a full market rate. No subsidy,
no rent control, no "affordable housing" regulation, no land
giveaways. Plus, we want the developers to make a return on capital that is
not only adequate, but exceeds most other opportunities in their industry.
Our per-unit budget looks like this:
$30,000 construction costs
$10,000 land & other non-construction costs
$10,000 profit margin
This includes a 20% profit margin. Is this enough? In 2015, Toll Brothers, a
major homebuilder, had a pretax profit margin of 10.7% on sales. The average
unit selling price was $755,000. The company's capital structure was about
54% debt (including all liabilities), and 46% equity. So, if you had a 20%
profit margin and a 4% cost of capital on debt (vs. 3.9% on debt and 2.9% on
all liabilities at Toll Brothers), and a construction cycle of 12 months,
that would imply roughly a 49.7% return on equity before taxes, and 33.8%
after taxes. Not too shabby.
target="_blank" https://www.tollbrothers.com/investor-rela.../10k-statements
Our $50,000 housing unit can take many forms, from detached wood
"cottages" up to 70-story highrises. Obviously, the higher the land
cost, the more dense the form that is required, to keep the land costs to
$10,000 per unit. If you put 200sf cottages on 1000sf plots (1/42nd of an
acre) then you need land costs of less than $420,000/acre. But, with a
70-story highrise, you could pay as much as $200 million per acre, and still
get $10,000/unit costs.
For detached housing, the cheapest, and worst, is the lower grade of
"manufactured housing," which can run as cheap as $50/sf. So, for
$30,000, you could get about 500-600sf. But this is really dismal and
crapulous, so let's forget about it.
For a nice wood-framed cottage, you might be able to do $150/sf, which means
about 200 square feet with a budget of $30,000. Since this is quite small, it
could actually be done with manufactured housing; or perhaps on-site building
too. What might this look like?
target="_blank"
This
community of 400sq ft. cottages cost $40,000 each.
This manufactured home is of a better sort of construction quality that might
serve our needs well:
Here's another neighborhood of cottages, in Martha's Vineyard, MA:
Dense spacing here, on plots that could be 1000sf. Martha's Vineyard, MA. We
are using target="_blank"our Traditional
City design principles, of course w target="_blank"ith Narrow
Streets for People of about 15 feet wide.
With a 200sf footprint, it would be possible to use plots of 500sf, with some
room left for a little backyard. One advantage of the detached cottage
approach is that it is a format that conceivably could be built by the owner.
This would eliminate the need for a profit margin, and also eliminate labor
costs. The result would be a cost of perhaps $30,000; or, a nicer and larger
cottage, within our $50,000 budget.
FastCoexist did a story target="_blank" on these
houses which cost $20,000 (in materials) to build.
Thrillist did a story target="_blank" on houses
that can be built for less than $25,000.
Inhabit.com did a story on t target="_blank"his under-$30,000
flat-pack home.
A French architectural firm released t target="_blank"his home design
that can be built in four days, with nothing but an electric screwdriver.
Using superinsulated Passivhaus design, it costs less than $41,000 to build.
Moving up the scale a little bit, we come to a three-story woodframe walkup
apartment building. We get some efficiencies of scale here, and our
construction costs drop to $100/sf. This allows us 300sf/unit, but since some
of that is used for hallways and other shared space, our apartment becomes
250sf. (In 2011, the National Association of Homebuilders release target="_blank"d a construction
cost breakdown showing that the average suburban house built that year
had construction costs of $79.67 per square foot.)
Let's assume a 6000sf building footprint. This would contain twenty 250sf
units per floor, with some shared space. Three stories means sixty units. With
60 units, we have 60*$10,000=$600,000 budget for land. Our 6000sf building
footprint sits on a quarter-acre (10,500sf) of land, so the land costs could
be as much as $600,000*4=$2.4 million per acre. It could look a little like
this:
target="_blank"
A somewhat more ambitious version of this basic format is here:
cred target="_blank"it: Andree
& Edward
This street in Bergen, Norway illustrates what you can do
with two-to-four-story wood construction. The overall effect is very nice,
but the buildings themselves are pretty simple.
Next, we have a six-story structure, which is about the upper end of the
Traditional City or "lowrise" format. We will step up here to a
better standard of construction, such as brick or steelframe, with a cost of
$200/sf. ( target="_blank"The average
U.S. construction costs for 4-7 story apartment buildings in 2012 was a
little under $200.) This reduces our unit size to a really quite tiny 120
square feet, plus some common areas. Our footprint is still 6000sf, but since
the unit size is smaller, we can get forty units per floor, or 240 units for
a six-story building. At $10,000/unit for land, that gives us a budget of
$2.4 million for land. We will use more of an "attached" format
here, with a little space in the back, or a 7000sf (sixth of an acre) plot.
This translates into $2.4m*6=$14.4 million per acre land and other costs.
This is interesting. Even at just six stories, and a unit cost of $50,000, we
can build in a place with land costs of $14.4 million per acre. Admittedly,
it is only 120 square feet. That is pretty small. But, it is only $50,000.
You could pay ten times as much, and get a place that is ten times larger --
which is still only 1,200sf. And it would cost $500,000. But, maybe 120
square feet is enough, and you have better things to do with your next
$450,000.
Europe is full of fantastic neighborhoods with this basic format, of
six-story masonry construction, possibly with retail on street level.
Practically all of Paris fits this model.
target="_blank"
Paris, France. Cred target="_blank"it: zoetnet
target="_blank"
Vevey, Switzerland. Cred target="_blank"it: Yola
Simon.
Seriously, though -- 120 square feet? That would be about 17'x7'.
This is very small by any measure ... but, it is still larger than the
"tiny houses" that people build on trailers, which average about
100 target="_blank"sf. This
family of four lives in a 165sf house they built themselves. Are they
poor? No: after losing their previous 1,500sf home to foreclosure, they have
found financial freedom, because they are debt-free and their housing
expenses have fallen to near zero. This family of fourteen li target="_blank"ves full-time in a single RV. For them,
this is not grinding poverty, but rather, an exciting adventure. For some
reason, if our houses have wheels or sails, their tiny size does not bother
us.
Here' target="_blank"s a 120sf
apartment in Toronto:
target="_blank"
Here' target="_blank"s a 120sf
apartment in Paris:
Wired did a story target="_blank" on this
130sq ft apartment in Paris.
Laura and Matt live i target="_blank"n a 120sf
freestanding "tiny house." Here's another&n target="_blank"bsp;120sf
freestanding "tiny house."
Maybe 120sf is OK. Maybe it is enough. Maybe you don't actually have to spend
more than $50,000 on a place to live, even in an expensive place like San
Francisco, if you don't want to. Maybe 600sf, or 6000sf is nice ... but ...
not really necessary.
Now let's go a little farther, with "midrise" construction of about
twelve stories. We still have a 6000sf footprint, and forty 120sf units per
floor, for a total of 480 units. Everything else is basically just the
six-story example times two. We could have land costs of $28.8 million per
acre. It could look like this:
It's pretty much just math from here on out. At seventy stories, you would
have 2800 units, and a land budget of $28 million. We now use 100% of a
6000sf plot for footprint. It works out to $196 million per acre.
target="_blank"
If you had a building footprint ratio of 60%, target="_blank"25% parks
target="_blank"and squares,
15% roadway and these 70 story buildings with 2800 120sf apartments per
building, you could build 7.8 million housing units per square mile -- or,
1/47th of the land area of the City of San Francisco (population 864,000).
Everyone could live within walking distance of one single BART station, with
seven million apartments to spare. I don't think I would recommend that. But,
nobody could complain about a "housing shortage."
For San Francisco, probably the four-story and six-story models are best,
since San Francisco is basically a lowrise city. Paris is also a lowrise city
that rarely rises above six stories; and yet, the population density of the
city of Paris (55,000 per square mile on average) is three times greater than
the city of San Francisco (18,500), and seven times that of Oakland (7,417).
Some of the arrondisement exc target="_blank"eed 100,000 per
square mile. A lot can be done within the lowrise format. Perhaps there
would be a few midrise units over six stories, and even some highrise,
probably around the downtown area.
Probably, most people would not want to live in such a small living space.
They would be willing to pay more, and get more. By considering the $50,000
option, we effectively consider everything in between: $80,000, $100,000 or
$150,000 options as well, up to the $5 million townhouse. But, there would
always be something that people could afford, in any neighborhood.
As living spaces become smaller, what's outside the door becomes more
important. I've included here some examples of what I call target="_blank"the Traditional
City, which can work easily with this small-apartment format. It is very
different from the harsh and ugly Nineteenth Century Hypertrophic City format
of San Francisco today.
The Nineteenth Century Hypertrophic pattern is characterized by overly large
roadways dominated by automobile traffic. Not only does this waste an
enormous amount of valuable space, it tends to produce an environment that is
dismal and bleak, and unsuited for families. While any city needs some larger
Arterials for vehicular transport, most streets can be much more
human-friendly than this.
target="_blank"
Typical street in San Francisco. Cred target="_blank"it: Anja
Redenbaugh.
In many situations, it is not at all easy target="_blank" to change the existing street structure.
But, in other cases, it is not only easy, it is necessary. Google wants target="_blank" to build
10,000 housing units near its headquarters in Mountain View, possibly
using the 1000-acre site of an old airfield. In this case, the development
could easily incorpor target="_blank"ate Traditional
City principles including Narrow Streets for People, instead of
replicating past error. Tiny apartment living would not only be cheap, it
would be beautiful. And, you could walk to work.
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