[Originally written 7/26/14]
Reiham Salam, who writes at Slate.com and Bloomberg and National Review and, well, all over the place, has multiple times proposed that the fix for affordable housing is zoning reform — and, as far as it goes, he is correct that, due to simple supply and demand, when there’s a greater demand for housing than supply, prices go up. In places like the Bay Area, I imagine that this is a huge issue. Certainly, no city should gripe about affordable housing that hasn’t first reformed its laws to enable housing construction with as great a density as the market demands, and no non-profit should whine about the need for more government intervention without first promoting attention to this issue.
But there are some parts of the country where the price of land is not an issue — and the most significant of these is Detroit. Consider that even in a major historic district, you can buy a house for less than $5,000 (no, not the one pictured in the link), and here’s a table I created analyzing the listings on realtor.com — as of last July, fully two-thirds of the real estate listings had asking prices of less than $25,000. Go over there, or to any such real estate site, and sort by price — a city lot starts at $1, plus the cost of clearing the demolished or ruined home.
So my plan — for later this weekend — is to look at actual costs of renting a home in Detroit, which ought to be a sort of baseline for all the other costs besides land. In a way, Detroit is the nearest we have to homesteading in 2014, though with the need to provide ones own police protection.
Thoughts?
UPDATE:
So I thought I’d research this by going to Craig’s List. Here’s what’s on offer:
3 br brick cape cod, far east side, $550.
2 bed house on east side, $600.
3 br, $625
3 br brick bungalow, far east side, $700
3 br brick bungalow, east side at 6 mile road, $800.
4 bed brick bungalow, west side, 7 Mile Road (that is, near the city limits), $850 (or $29,999 for sale)
These properties all look in decent condition, that is, no boarded-up windows, and, though it’s not possible to tell what the overall neighborhood is like, they’re generally on the edges of the city, where, relatively speaking, the decay isn’t as bad. If you’re not familiar with Detroit, I didn’t just pull the houses and exclude apartments, but generally what was advertised on Craig’s List was houses, and most housing in Detroit is in the form of single-family homes because of the way the city developed historically.
So I’m thinking that this is sort of a baseline: with minimal lot costs (because these houses are in the ” better neighborhoods”), a home in “standard” (as opposed to “substandard”) condition would be somewhere around $600 – $700.
What does that get you in Chicago? A room in an SRO, for one ($145 weekly rate).
Well, actually, that was the first listing I came across. $500 seems to be the starting price for apartments on the South Side, generally studios.
Then I went over to realtor.com — surprisingly, there are quite a lot of apartments listed there, so never mind my first comment about prevalence of houses vs. apartments (though many of these seem to be two-flats). They generally seem to start at about $400 for one-bedrooms.
So what’s my conclusion? Mostly that this isn’t a straightforward project. The homes on craigslist in Detroit all seemed to be in good condition; the ones in Chicago I couldn’t as easily assess. Is this a true baseline? — $400 for an apartment, $650 for a house? Or do the crappier places get rented by word of mouth, and not even make their way onto Craigslist at all?
Anyway, that’s all I have for you, for now, except that I have a few more general thoughts that I’ll drop into a different post.
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