Demand is growing for new housing at a middle-market price, but options are limited for young first-time buyers or seniors looking for a smaller one-story home.
In the middle-market price range – $250,000 to $300,000 – someone who’s earning $60,000 to $80,000 a year historically has been able to have a car and buy a new house. A couple each making around $40,000 should be able to afford two cars and a new house.
Now, most new housing in the Richmond market is out of reach for many millennials and seniors. Due to zoning requirements, regulations and construction costs, a single-family detached house on a 10,000- to 12,000-square-foot lot usually is priced at $300,000 or above.
It’s time to think differently about residential development for the middle market. Typically, young couples move from apartments to starter homes, but millennials saddled with student debt are renting longer and finding it difficult to afford their first new home and raise a family. While construction costs remain a fixed part of the equation, options aside from the single-family detached house can satisfy middle-market tastes.
Multifamily units and condos can be developed in a variety of ways aside from a traditional row of townhouses. Some designs gaining popularity include:
- A new type of property called a “two over two.” This design takes a four-story townhouse and cuts it horizontally, creating a two-floor unit on top of a two-floor unit. With this approach you can turn six townhouse buildings into 12 two-story units. What was a 3,500- to 4,000-square foot townhouse becomes a 1,500- to 2,500-square-foot condo unit.
- Pocket communities. An example is a three-story unit with garages on the sides and two-story units above each garage, all surrounding a central courtyard.
- Single-family detached homes on small lots. A small-lot zoning ordinance in Los Angeles increased density by allowing single-family detached homes to be built on townhouse lots of 3,000 to 4,000-square-feet.
Local governments can help middle-market inventory flourish by allowing increased density – more housing units on smaller lots. These nontraditional properties can fill in established corridors in existing residential neighborhoods and replace old, tired commercial properties.
Encouraging housing development aimed at the middle market provides an opportunity for urban areas to keep millennials that are attracted to the city’s amenities. Millennials and the next generation of homebuyers will continue to fuel demand for 1,000- to 1,200-square-foot townhomes.
Although multifamily developments have long battled the perception that smaller housing doesn't last over time and brings high turnover, new designs for middle-market homes can be built with quality in mind for first-time buyers.
As a community, we can develop solutions to create new homes for future generations of professionals in Richmond through ongoing conversations with elected officials and local government. With changes to zoning laws and removing other barriers to development, the middle-market starter home can make a comeback.