Downtown Middle-income Housing

While participating in the HKS Design Fellowship last weekend, our design team addressed the need for middle-income housing in downtown Dallas. This need was specifically recognized in the Dallas 360 Master Plan. Like most automotive based cities that are now going through a sort of downtown Renaissance, downtown Dallas is lacking in both middle-income housing and amenities (i.e. schools, grocery stores, etc.) Emerging downtown cities are depending on a significant middle-class demographic to add to the social and economic vibrancy of the city. But as developers continue to pursue the more lucrative deals found in low-income housing tax credits or luxury residences, cities have found that growing a downtown middle-class is a difficult and complex task . Downtown land values typically price out the middle-class. These families may want to live downtown, but when considering the negatives of cost, poor schools, and residence size, they often turn to the suburbs. This demographic has often been criticized for their suburbanization and automotive dependency; yet, it is clear that automotive-based urban design strategies and economics have compelled this demographic toward the suburbs rather than it simply being a matter of preference. The Dallas plan addresses the problem this way:  "Without some form of subsidy, it frequently is infeasible to build new housing units in Downtown, and in many cases to rehabilitate older buildings, that then are sold or rented to middle-income households. To fill in the market gap, accelerate the area's revitalization, and support the housing needs of Downtown businesses, the City of Dallas should identify sources of funding to subsidize construction of units for middle-income households..." The 360 plan recognizes that even if subsidies for middle-income housing were provided, this would still only yield 25% of housing for middle-income households (see graph below). This, however, is better than "recent production of housing in Downtown, which has skewed toward the upper income levels." The recommended percentage of future downtown housing accounts only for new construction, and not for existing units that "may become more affordable to middle-income households as the units age."
Dallas 360 Master Plan, p. 76

The plan goes on to prescribe generic programming and construction recommendations to reduce construction costs and make this type of subsidized housing more feasible. Nonetheless, it is clear that Dallas, as well as other cities, are willing to make a bet that middle-class suburbanization is more about economics than the lifestyle suburbs offer. Their argument is that people will readily sacrifice residence size and parking availability for the attributes offered by downtown living. This leaves us with one important question: will the bet pay off?

Financial Architecture of Affordable Median New Home Prices

Over the past few years we have heard a lot about home values. We have heard that millions of Americans are underwater - they owe more than their home is worth - and there are thousands of sound bites from politicians, promoting policies that they feel will best address the housing crisis. It seems that almost everybody wants home values to go back up - or at least stop falling. It would definitely lift a burden from the shoulders of many struggling families. But, almost simultaneously, we were hearing another oft-repeated phrase, and this phrase raised a lot of questions in our minds about the home value problem. The phrase, and you will most likely recognize it, is this: real value wages have remained mostly static over the last 30 years. That is to say, if you take inflation into account, people are not making more money than they were 30 years ago. So, obviously, the question is this: if people are not making any more money, how can they afford to buy homes that are increasing in value? So, we took to the census, looked at some income numbers and some housing numbers, put them into a spreadsheet and came up with the following:



The point is this: if wages remain stagnant, how can we expect our home values to do anything but remain stagnant? If we want to treat our home as a growth investment, how can we expect our children to be able to purchase homes for their families? Certainly there will be real estate "hot spots" where supply cannot meet demand, and therefore values increase proportionately. But if you take a look at the entire housing picture, these "hot spots" are a separate and almost unrelated circumstance when the primary concern is the median income homeowner. When the median home value to median household income ratio becomes too large (we guess somewhere between 4.5 and 5), people simply cannot afford homes. (If you couple this with other family budget items that have grown faster than inflation, i.e. health insurance, the picture gets worse.) During the housing bubble mortgage lenders made credit too easy in order to maintain the illusion of affordability. The collapse of inflated housing prices is likely the most frustrating burden that the economic downturn has placed on the middle class.

So, what does this have to do with architecture? The most significant and interesting residential architecture is a home that is personalized to the home owner(s). As architects, we want people to recognize the impact their space has on them. We want people to realize the value quality architectural design can bring into their lives. Even when purchasing an existing home, we encourage people to take charge of their space, remodel it, make it fit them. In the face of stagnant wages and increasing home values, it is difficult not to become cynical about architecture for the middle class - the mediocrity we strive to elevate. Under increasing financial pressure, we realize that people will have less and less means and appetite for architecture. In the face of this, we must concede that in most circumstances, quality architectural design is a luxury, not a necessity. And when you consider your profession to be so important in so many ways, that's a tough realization.