It will probably take a full-on economic meltdown to move urban housing markets away from high-end condos and rentals in prime locations. I get it, building is tough: the land is crazy expensive, most cities impose money and time consuming regulatory obstacles that would make a Byzantine bureaucrat blush, there’s no labor to build anything, and lenders shy away from any project letting off the faintest fragrance of risk. And then there are the other buyers and renters — those middle-market, debt-saddled, salary-plateauing masses yearning to be housed. Why bother developing accessible “missing middle” housing? In high-end housing, hefty price premiums can be charged for superficial upgrades like a travertine-clad lobby designed by Charo; these premiums help mask and offset the innumerable and inevitable inefficiency-related costs of urban development.
So until that meltdown occurs, until lease-ups on those new $5,000/month one bedrooms start taking years, not months, the quest for more affordable, market-rate housing will be more art than science. Here are a few cool projects that are working within the current market and regulatory conditions to bring more accessible housing to city-centers.
One hundred years ago, most cities had housing options for nearly every demographic. Unlike today, pre-housing reform cities didn’t pathologize their citizen’s socioeconomic stations, they capitalized on them. Even the lowliest pauper with a nickel in his pocket could find a covered, out-of-the-elements place to lay his head at night.
The flophouse was the most basic housing option. Flophouses charged a very small amount of money for a bed that was usually located in a room filled with large numbers of other beds. Unfortunately, the lack of regulation resulted in horrific living conditions and most flophouses were shuttered in the second half of the 20th century, along with residential hotels, boarding houses, and other types of housing catering to middle-and-low-income transients.
But just because the execution of the flophouse sucked didn’t mean the basic model sucked too. Cities are perpetual breeding grounds for itinerant workers looking for affordable, flexible housing.
Podshare is taking this historic model and giving it a fresh coat of paint (and lots of 2x4s). The company, founded in 2012, has four locations spread across Los Angeles. They take existing commercial properties and convert them into short and medium-stay bunkhouses.
Podshare “members” pay around $50/night (I’ve got a feeling you can get a monthly break). The charge covers your bunk bed (some of which convert to desk areas), linens, a locker, wifi, an in-pod TV/LCD screen, outlets, and access to kitchens, baths, work tables, events, and other stuff.
While this form of housing might strike some as dystopian, it’s important to remember it’s not for everyone. Different stages of life require different types of housing. For every ten people who will find the lack of privacy abhorrent, one will find it enticing. The key is that Podshare offers clean, flexible, affordable-ish housing in prime locations. Also, it works within existing market and regulatory conditions. And given that they’re packing a large number of people in a relatively small space, I imagine there’s a strong business case for the model.
In the next few years, thousands of new units are coming online in NYC, SF, and other pricey metropolises. Unfortunately, most of those units — for reasons outlined above — are high-end with high rents. This is already leading to a high-end inventory glut which is driving prices down at the top — a descent that is expected to continue in the near future. But because of the astronomic starting rents, even a 5–15% rent reduction has little value for middle and low-end renters, leaving those markets competing for the limited supply of cheaper, older inventory.
SF-based startup Homeshare is capitalizing on this glut of new properties. With buildings in SF, Silicon Valley, and NYC, it is adapting new units for sharing, often converting living rooms into bedrooms with moveable partitions. By increasing unit density, Homeshare can offer approachable rents in otherwise unapproachable buildings and neighborhoods. To illustrate, you can get into a luxury SF rental building for around $1,100 (“converted” rooms cost less than private ones).
Like Podshare, Homeshare is not for everyone. Many won’t want to sleep behind a partition, nor might they want someone sleeping in their living room behind that partition. If that’s not your thing, don’t move into one.
However, if you’re into living in a relatively affordable, well-located, well-maintained, clean, amenity-rich home, and you’re not super concerned about privacy, Homeshare gives you an option within our screwed up market conditions.
Boston-based startup Nesterly is building a network of senior-owned homes that are opened up for younger folks in search of affordable rents. In exchange for those low rents, lodgers may be asked to help around the house, or simply provide company for otherwise isolated seniors.
Given that a disproportionate amount of housing in America is owned by older adults, and seeing that that housing is often underutilized, Nesterly is a great match for the lopsided nature of market conditions.
Nesterly’s network is currently in Boston only, but I see great potential in other markets. For example, in my Brooklyn neighborhood there are scores of seniors who purchased large homes 30–40 years ago when they were a fraction of their current value, and when those homes housed the owner’s families. It’s not a stretch to imagine these house-and-space rich seniors enjoying the social aspects of having a young lodger and the supplemental income that comes with.