Providing Affordable Housing in an Urban Environment

Knoxville Skyline, October 2016
Knoxville Skyline, October 2016

There is no shortage of articles discussing housing prices in urban areas. It’s not a complete reversal of trends from forty years ago, but it does provide an interesting contrast. Will the trend last? What are the implications for our future? It’s hard to know, but some recent articles have explored those questions. In a sense, this is a parallel discussion to the expense of maintaining suburbs and the relative low return on investment they provide to municipal governments, which we looked at a couple of weeks ago.

Writing in the Washington Post last summer, Emily Badger and Darla Cameron pointed out the obvious trend we could easily recognize in downtown Knoxville, in their article, “Americans are Paying More to Live in the Very Places They Once Abandoned.” The focus is on five metropolitan areas, Portalnd, Washington D.C., Houston, Minneapolis and Denver. They point out that in these and other once neglected cities, “home prices over the past 25 years have appreciated more in the heart of big cities than just about anywhere else.”

Maps of each of the cities demonstrate that the urban core has appreciated far more over the last twenty-five years than have the less-central areas. They point out that an examination of mortgage date from 18,000 zip codes across the country, including 100 million transactions over forty years, “shows that demand for city living has been rising for a generation — even in unexpected corners of the country.” Home values in center cities also rebounded most quickly from the last housing downturn.

They note that several trends seem to be at work, including, people wanting to live closer to jobs to reduce time in traffic, the attraction of amenities an urban core offers and the steep decline in violent crime in cities across the country. While acknowledging this is good for the city, the authors make the point that it also quickly raises an affordability issue. They point out, “Close-in neighborhoods are becoming higher-income, more educated and more white . . . As home prices rise in these places, they could become unaffordable to people who have lived there in the past — or need to work there today . . . assuming high prices can’t be met with sufficient supply, high prices are going to mean these will increasingly become boutique towns available only to the wealthy.”

Knoxville Skyline, October 2016

A July article, “The Next Baby Boom: Affordable Urban Lifestyles for Millennials with Children,”  on Strongtowns.org by Jennifer Green points out the interest that generation has in living in or near an urban environment and the challenges they face in trying to start families as they attempt to do so. She follows the journey she and her husband – millennials with middle-class, college educated jobs followed as they realized living in one of the “first tier” cities – London, New York, San Francisco, Washington, D.C. or others would not be an economic possibility for them. They chose Tulsa, Oklahoma which has “collar” neighborhoods which remain affordable and are near downtown. Sound familiar?

Realtor.com had an interesting piece, “Oakland Fire Shows Affordable Housing is a Tinderbox Issue,” which connected the recent Oakland warehouse fire to this very issue. Three dozen people died in what was a re-claimed warehouse which did not attempt to meet residential codes. Those living there, mostly artists and others with lower incomes, didn’t have other affordable options if they wanted to stay in Oakland. According to the article, across the bay in San Francisco there are likely 100 or more similar housing arrangements.

Clearly, we’ve seen housing prices in and near downtown increase dramatically over the last decade. While locally our prices are seen as high, that isn’t true when viewed through a national or international lens. Which makes us a very attractive place for the kinds of people discussed in the above articles: urban amenities for a much more affordable price than a larger city. With that comes the peril that we will continue to see rapid increases in housing prices and, with that, the unfortunate side-effects of a successful city.

Marble Alley Lofts, Knoxville, March 2016

I don’t think we are at a crisis point, but ask yourself if any number of downtown workers could afford to live downtown. Wait staff, janitors, artists, clerks, line cooks, house cleaners, dog sitters, artists, musicians and others? And one of the disadvantages we have is there is that cheap, ready transportation isn’t widely available to bring them into the city. We have a limited bus line and nothing else.

As our density increases and housing prices continue to surge, affordable housing and/or better transit will become more of an issue here as it has elsewhere. Is there a plan to deal with this trend? Are we willing to invest the time and money it will take to successfully respond to the issue? Sometime soon we’ll revisit this topic and look at possible solutions, including some that have worked in other cities.

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