The Regional Planning Agency, led by John Bridger, on Monday night gave results of a housing study that has been a year in the making, including efforts to increase the supply of affordable housing downtown.
Mr. Bridger described elements concerning housing, that were taken into consideration during the research. A neighborhood is defined as a place that supports a lifestyle, “Urban”, is the first category and is defined as a place where people work, shop and play in close proximity to where they live. The diverse forms of transit such as biking and walking in addition to driving are important to this lifestyle. In the second category, “Suburban” single housing types are found clustered and there are no long linear street networks. These type neighborhoods promote seclusion and a predictable lifestyle. Driving is the main mode of transportation.
Nationally, two generations drive the housing market, the Baby Boomers and Gen-Y. The Baby Boomers have the highest ownership of homes, and most live in the suburbs. The Gen-Y has more ethnic diversity, originates from more urban backgrounds, is starting households and will continue to grow. Two-thirds of this group prefer the live-work-play lifestyle and prefer “attached housing” such as condominiums or townhouses.
Research project leader Yuen Lee told the crowd that in Chattanooga households have changed from 1970 compared to the trends seen in 2010. The average household size has decreased from three to two. Single-parent families made up one quarter of the population in 1970 which increased to about 50 percent of families in 2010. Single mothers head 40 percent of families. Gen-X is the largest group in Chattanooga now, and has different housing demands than the generation before it.
The new housing trends for Gen-X is for smaller homes. It is unknown if this is because of need, or affordability. They also want different housing types. This is confirmed by the increases seen in condominium and townhouse sales versus single-family houses. Low maintenance is also a defining consideration. An amenity desired by all is a good neighborhood school. Living spaces need to be affordable as well as livable and in good condition. Zoning may need to be updated to allow for different housing types such as multi-generational houses.
In Chattanooga, the average median income is $33,000 which, at the recommended 30 percent allocated for housing, allows for monthly rent payments of $620. The average cost to rent an apartment in the city is $732 which causes a housing cost burden of $112 to those making the median salary.
The average of $33,000 income qualifies a buyer for the purchase of a $90,000 house if the down payment of $10,000 can be made. In real estate multiple listing in Chattanooga, only 30 percent of the available homes in Chattanooga are priced at $100,000 or less and this does not include taxes and insurance which must be factored in. Ms. Lee said that transportation costs would be affected by where a person lives and that should be no more than 15 percent in figuring affordability.
Mr. Bridger, talking to the panel of 15 people who are in some way connected to the housing industry, described the plan of action to increase the supply of affordable housing. The strategies are different depending on whether the target area is urban or suburban. In an urban setting, the first course of action is to define the housing types and determine the desired mix. Rejuvenation of old neighborhoods is the next step, and to create good schools in the urban areas. Recommendations to do away with the blighted houses possibly by rehabilitation funds being provided. Partnerships with realtors to encourage them to bring buyers to the urban neighborhoods should be fostered. A portfolio of moderate density housing types should be developed and a process to review the designs including detailed drawings should be held early in the development in a review with residents. Incentives could be provided to developers and builders and a housing trust fund could be established as a resource for their use. Public infrastructure improvements would be promoted to encourage re-development of these areas.
The strategy for developing a suburban district to lifestyles that are changing would require the modification of city codes and standards to allow for different housing types, and more diversity. One example suggested is for multi-generational houses while making the style and design fit the location. Areas identified as high-density would need to be developed in close proximity to major activity centers and transit service. A guide for developing the moderate density infill projects would be needed along with a public review process. Incentives could potentially be offered to the developers as well as home rehabilitation funds for repairs to houses bought by first-time buyers. An existing retro-fit energy program is available through grants.
Comments concerning the development of more affordable housing in the city center and recommendations from the study were addressed by several panel members. Steve Marsh, a banker specializing in real estate, commented that apartment vacancies are now less than four percent. He sees the need for additional apartments because the rule of supply and demand is causing rental prices to increase. Bobby Joe Adamson, a developer and home builder, said that constructing “green buildings” with such features as improved insulation, increases affordability in the long term. Don Moon, a downtown developer said it is not easy to develop downtown and the cost is high. It would be possible to lower building expenses by making changes to bathrooms and kitchens, but if the square feet are lowered on a unit, the high price of the land will drive up the cost. Additionally, he added that if you build ugly houses that you probably wouldn’t sell many of them.
Another real estate developer, Buck Schimpf, said that the developer takes a risk and must get a return on investment which makes it hard to build affordable rental housing. In downtown areas, it is hard to accumulate enough land in order to assemble a large tract which would then allow for a big development where costs could be spread among many units. Another expense to consider, he said, is that of maintenance and management as well as taxes for each apartment. Commenting on the proposal of a housing trust fund that could be a potential resource for a developer, Mr. Schimpf said that perhaps would help in the construction phase, but the other costs would remain.
Commenting on the proposed incentive program to spur affordable housing downtown, Pam Ladd, Chattanooga City Council member, said there would need to be a formula to determine what a smart incentive is. Because of the tax revenues for the city, it would need to make sense for the city to provide enticements. She said incentives have to come to a stop at some point.
A more specific plan of action will be presented sometime around January. Additional information on the Chattanooga housing study can be found at http://www.chcrpa.org/HousingStudy.htm