This might be a stupid question; is it not possible to min-max apartments for overall cost of maintenance or cost/person so it's easier to break even despite a possible higher initial cost?
Are we designing low income housing wrong? Is anything getting in the way?
I'd argue yes. We should be building housing for working class / middle-class residents (sometimes called "missing-middle" housing, although developers often abuse that term to include luxury units) That's where demand is greatest while still having reasonable budgets and modest-but-workable profit margins for developers involved.
> Is anything getting in the way?
Yes, developers. (Occasionally zoning/historical associations/local laws in places like San Francisco or NYC. But primarily, it's developers)
Instead of building where demand is greatest, developers build only where profit is greatest -- almost every developer focuses solely on ultra-luxury housing (with ultra high profit margins) or low-income housing (where margins are reasonably good due to government subsidy).
If there was new working-class housing construction, their old units would filter down to low income households, because there's enough middle-class people for that impact to be felt in a market. But the margins there are lowest, so no company chooses to do that.
Instead, property developers focus soly on high end. Technically, those filter down eventually too, but by definition, there will never be enough high-income people for those properties to filter down to middle class folks in amount meaningful enough to help the market (so in turn, their properties can't filter down to low income households)
This breaks the entire market. High-end construction costs soars (because they want it and can afford anything). Middle-class properties become psuedo-high-end (for no other reason than lack of middle-class product) which creates this weird distinction between rich middle-class people who bought before the bubble, and poor middle-class people who have healthy wages, but burn 50+% of their income on rents (and so are effectively poor, even though they are on-paper upper-middle-class), and now you have an ever-growing group of "low-income" people who can't afford anything.
If we prioritized middle-class working-class housing, we could get units going without major government subsidy, and the old housing could become affordable to low-income folks (also without subsidy). But that would require companies to not prioritize profit over everything else, so it won't happen.
I would rather argue that government regulation is definitely the problem on multiple levels. For one you probably have to deal with state and federal regulations making it very difficult to get economies of scale. Does every state/city really need to define the bare-minimum requirements for a house differently? Is there really nothing they can agree on so we can have standardized housing rules? That alone should limit housing costs significantly but if you also limit the power of local government to restrict growth and force it to accommodate new citizens rather than try to block them would also be a very good way to reduce a lot of the costs of new housing. I wonder how much developer money is spent litigating in places like New York and San Francisco that should be seeing most of the growth in housing.
Notice that this is not a problem In most of the US. Most housing in the US is still probably cheap it's just nobody wants to live in the middle of nowhere. Housing is very expensive in a few critically important areas that have largely failed to accommodate the influx of immigrants.
> Yes, developers. (Occasionally zoning/historical associations/local laws in places like San Francisco or NYC. But primarily, it's developers)
No, it’s primarily zoning.[0][1] To neglect the vast middle of the market is economic insanity. If some developers build only luxury housing, then they’re leaving money on the table; some other developer will build and sell. When Domenico Crolla can sell a pizza for $4,000, that doesn’t mean Pizza Hut stops selling $15 pizzas. In a well-regulated market, somebody will fund and build middle-class housing.
The problem is that luxury car-oriented regulation has made practical housing near jobs impossible to build.[2][3][4] Occasionally, hyper-local objections to affordable housing.[5] But primarily, it is misguided regulation.
[0]http://www.theatlantic.com/business/archive/2015/11/zoning-l...
[1]http://www.citylab.com/housing/2016/01/how-zoning-restrictio...
[2]http://www.citylab.com/cityfixer/2015/05/how-parking-keeps-y...
[3]http://www.spur.org/publications/spur-report/2006-06-01/redu...
[4]http://www.citylab.com/politics/2012/06/birth-zoning-codes-h...
[5]http://www.sfchronicle.com/bayarea/article/In-a-wealthy-SF-n...
Also, many communities have zoning codes, many fifty years old, that make it difficult to build low-income projects by restricting unit sizes, mandating minimum lot sizes, etc.
There are cases of communities being sued over discriminatory zoning, but the typical impact is that the communities add flexibility for less expensive single family homes, but the dense housing and multi-use neighborhoods that work well for low-income communities are not incentivized. I know Massachusetts allows zoning to be overruled if a community lacks affordable housing (40B?), but it is still a fight.
Lastly, between two developers, one building high end and the other building low-end, who is going to pay the land owner the most money if there is the same amount of units allowed by-right? If the low-end developer pays high-end land prices, where does the extra money come from?
We're designing it for people with no money. Hard to make a consistent profit that way.