It is generally accepted that America (and Knoxville) has a housing shortage and, particularly, a shortage of affordable housing. At the recent Preservation Conference hosted by Knox Heritage, keynote speaker Katlyn Cotton, Associate Principal at PlaceEconomics, detailed the crisis and an interesting argument that historic preservation (though not of the grand type you might imagine) offers a critical piece of the solution.
She noted that estimates of the extent of the shortfall in housing range widely, depending on the source, from 1.5 million to 6.5 million homes. Her firm estimates a far higher number in affordable or lower income housing, to the tune of about 7.3 million. She said we built about 1.5 million homes in 2023, but most of that is not affordable housing.
That’s where preservation comes in: We are demolishing older housing in favor of newer housing at a rate that will prevent us from ever catching up. That existing, older housing comprises a large percentage of our affordable housing. Unfortunately, while “Between 1987 and 2021 we built 3,550,000 affordable housing units,” during the same period we lost “11,479,000 housing units built before 1970.” If half of those homes were preserved over that period, instead of demolished, we would not have a housing shortage in America.
She calls this existing stock of older homes “naturally occurring affordable housing.” What makes them affordable? It starts with size. Smaller homes are generally less expensive than larger homes and most older homes (pre-1970) are smaller because Americans didn’t expect massive houses in that era. These smaller, older homes are at greater risk of being lost while most preservation efforts go to saving large, grand, architecturally or historically valuable properties, not small, architecturally insignificant homes.
At the same time, the rate of rent-burdened households remains high both nationally and locally. Rent burdened generally means 50% or more of income is going to housing costs. In Knoxville, 48% of renters are housing cost burdened. Most of the new jobs being produced in our modern economy do not pay well enough to keep pace with the current increases in rent and/or purchase price of homes.
In addition to having smaller footprints, a significant portion of the older housing stock is multi-family, which often also translates into less expensive. While we tend to think of older homes as often having historic designation and, therefore, protection, 94% of pre-1920 buildings have no protection.
She pointed to three variables that impact affordability. One is simply age. Older properties command a smaller premium on the market (hence why so many get demolished). She pointed to regular maintenance as critical for these properties and pointed out that long-term tenancies (which old properties tend to have) slows rate increases. Second, as noted above, is size.
Pre-1940 housing typically averaged just over 1340 square feet, while the average size of new construction by 2023 was 1902 square feet. All other things equal, that translates into a 40+% higher rent. Going just a bit further back, there are currently 12.7 million pre-1920 homes in the U.S. with less than 1,000 square feet. “The median monthly cost of housing built before 1939 is about $700 cheaper each month than a home built in 2023.” Another trend supporting the argument for preserving these smaller homes is that currently “over 60% of households are one or two people,” perfect for an older, smaller home.
Condition of the property rounded out her three variables. She said that 93% of pre-1970 housing is deemed “adequate.” This generally means if it needs repairs or renovation, the needs are not dire or prohibitively expensive. The three variables become less predictive if properties have either undergone extensive renovation or are in proximity to highly valuable property (think neighborhoods near downtown).
Regarding the near-downtown or other rapidly appreciating properties, these older homes become more vulnerable if the price of the land on which they sit constitutes 40% or more of their total value. At some point soon thereafter, the profit to be made by demolishing and replacing the older home with a new, more expensive build becomes a force for demolition. In the same situation, long-time homeowners may become less able to pay rapidly increasing taxes and insurance on their now-more-valuable property.
She suggested that as much as possible, cities and states need to offer help to established (often older) homeowners in the form of tax credits and home maintenance and repair funding. She pointed out that while it is less expensive to preserve older, more affordable housing, many cities only focus on building new, more expensive, affordable housing. Some cities have programs designed to replace roofs on older homes at a low or no cost, preserving the integrity of the structure and extending its life.
She also encouraged policies which would serve to make demolition more expensive, such as much higher fees for destroying an existing building. She referenced cities that require deconstruction, which is much more tedious and expensive than knocking a building down, but which has much less environmental impact as materials can be re-used and perhaps make other projects less expensive. She promoted alternatives to demolition when a building has reached a state of disrepair that prompts citations for code violations.
She also mentioned that much of the affordable housing represented in older housing stock is also being tied up in short term rentals, removing them from the local housing market to serve visitors. The reduced availability for long-term rentals or lower-purchase-price housing is one of several blows to providing affordable housing.
While not the only solution which needs focus, preservation of our older housing stock and support of those who live there needs to be prioritized. Fortunately, Knoxville does have programs that help, such as the Homemakers program and, particularly, the Owner-Occupied Housing Rehabilitation Program. Beyond that, we need to be certain we are protecting this older, affordable home stock from demolition and removal. It costs a lot less to preserve these properties than to build new.