The Promise of Our Cities
Curtis Scharfenaker • AIA, Senior Partner and Architect
It is no secret that the US is facing a housing crisis of unprecedented magnitude. The US needs to produce six million housing units per year to meet the annual demand. A four-fold increase to what is currently being produced, and 80% of housing that is being produced is now considered “unaffordable”. It is estimated that two thirds of the population cannot find affordable housing. The causes of the housing crisis are complex, and solutions will inevitably
require the mobilization and close cooperation of public and private efforts. How the crisis is addressed will result in cities that are effectively divided and polarized or a rebirth of cities as vibrant integrated urban centers of opportunity, healthy living, and true community.
Within this crisis there are tremendous opportunities for Architects at both the luxury and affordable ends of the market. Like the Architects of the Bauhaus and Post WWII era, Architects today are being called on to apply our technical and problem-solving skills to meet the demands of an enormous social and building challenge. Cities and Private developers are beginning to shift their focus to address the affordable housing shortage with a new urgency. City agencies are adapting and rewriting their zoning codes to allow changes of use for sites and buildings. Alternatives such as adaptive reuse of hotels, office buildings and low-rise retail centers are being developed, as well as infill projects that replace older stock low quality apartment buildings with higher quality mixed use projects. Architects are being called on to find new and creative ways to deliver quality buildings at a lower cost. Modular and sustainable timber frame construction are on the cutting edge of change, and rapidly emerging opportunities that need specific design expertise. On the social level, Architects must play a leading role in advocating for and creating quality living environments in the affordable housing market. We will need to demonstrate that through quality design, an affordable housing project can fit into any urban context or neighborhood and stand on its own as a good neighbor to luxury developments.
The Public and Private Response
There is consensus between developers and cities that providing higher density multifamily housing closer into the city centers represents the single most effective and sustainable strategy to overcome the shortfall of affordable housing. It is highly adaptable to different lot types, densities, market strata and size of investment. However, US cities have been slow to move toward higher density in city centers. The urgency of housing needs, however, are
pressing cities, private developers, and lenders harder than ever to find new solutions.
City, State and Federal governments have created numerous incentives to encourage multifamily development, including tax credits to offset construction costs, zoning changes to promote higher density projects along transit corridors, and streamlined planning review and approval processes. To attract developers, they have included requirements for any development receiving these incentives to provide a nominal 10% of affordable units within
each project, and subsidies to help offset affordable lower housing rents. Many multifamily developers have been understandably taking advantage of the array of incentives to develop the highest return projects catering to the luxury higher income market, often utilizing the most affordable sites to build the least affordable projects. These multifamily projects represent 85% of the annual multifamily housing starts in cities. These luxury projects
have a wide variety of amenities including common indoor and outdoor recreation facilities, game rooms, outdoor dining areas, dog walking and dog washing facilities, common work areas, concierge services, numerous social events, and integrated retail and grocery stores. These projects attract young professionals and often have rents starting at $3,000 to $4,000 per month for one bedroom.
Affordable housing, meaning the housing costs do not exceed 30% of the local median family income, represents only 15% of the annual multifamily housing starts. In response to creation of extensive incentives for projects that are 100% affordable, a growing number of socially minded entrepreneurial developers began developing a new type of affordable housing. These projects have included higher quality building and unit designs and finishes, indoor and outdoor public amenities that include landscape courtyards and recreation areas, as well as community rooms and play areas. Meeting the needs of these residents, developers are beginning to integrate socially supportive educational and health services. The combination of tax credits to help offset construction cost and rent subsidies have combined to help this market grow. The rise in construction costs and interest rates have made these projects as challenging as the luxury developments, and developers across all markets are faced with the same challenge of creating the best quality while containing cost.
Architects have a unique intersection of skillsets in building and urban design, where technology, art and social vision overlap. European and other global cities have proven that density and quality can coexist. As Architects we must act together with urgency to deliver quality, creativity, and craft in the built environment to provide a vibrant and healthy community that fulfills the promise of what our cities aspire to.
The Housing Crisis by Numbers
The housing crisis can be understood by some sobering statistics. There are also tremendous social and psychological effects that stem form the lack of adequate housing.
For the past 30 years, the US has consistently produced between 1.4 and 1.7 million housing units per year. In today’s market this represents a shortfall of between 5.5 and 6 million units to meet the annual demand.
- 80% of the new housing being produced is considered “unaffordable”, meaning the housing costs exceed 30% of the locally adjusted median family income.
- It is estimated that 2/3 of American homeowners and renters cannot find affordable housing. The inflation adjusted cost of housing has risen 25% in the last 30 years, while inflation adjusted gains in income during the same time have been 1% for 90% of the population.
- Single family homes represent 65% of new housing and are primarily being built on the edges of cities. 23% of current single-family owners spend over 30% of income on housing, and 10% are spending over 50% of their income.
- Multifamily housing represents 35% of new housing. A 20% increase in the last five years. However, 49% of current renters spend over 30% of income on housing, and 26% are spending over 50% of their income.
- Multifamily is the dominant form of housing being developed within city centers where those most needing affordable housing are concentrated. However, 85% of multifamily housing being built is targeted to the luxury market.
- With Inflation at its highest level in 40 years, mortgage interest rates at their highest level in 21 years, and construction escalating at 10% per year, the housing crisis has reached new levels of urgency that are a call to action for Architects.