Thursday, July 5, 2012

Moving Forward: Searching for Housing's "Perennial Grain"

by Jeffrey Lubell, Center for Housing Policy

Despite endless washing, my hands often betray my love of gardening (and dislike for gloves). My garden is not nearly as big as a farm, but it is big enough to require a sizable quantity of straw to make compost and cover the garden beds over the winter. In looking into whether and how to grow my own straw (the hollow stalks of grain crops), I came across information about "perennial grains"--a type of grain that you plant once but can harvest for many seasons thereafter. Perfect for producing lots of straw, not to mention grains for cooking and baking!

Here's the rub: right now, perennial grain crops are mostly a gleam in researchers' eyes. The grains we eat—wheat, oats, barley, etc.—are all annual crops, requiring time-consuming and energy-intensive plowing, planting, irrigation, and seed collection or purchase. Perennial grains would have many advantages, including deeper roots that require less irrigation and fertilizer; a longer growing season and improved productivity on marginal land; and elimination of the need for annual plowing, which contributes to the erosion and degradation of the soil.

All around the world, researchers are working to develop viable perennial grain crops through a wide range of strategies. It's a bit like the holy grail of sustainable agriculture.

This got me thinking about what the equivalent might be in the affordable housing world. Is there a "perennial grain" of affordable housing—a market-based solution that helps to significantly improve housing affordability? If so, what is it and how could we nurture its development and replication?

Before attempting to answer these questions, it is worth pausing to clarify the key characteristics of "perennial grains" that we might look for in a housing good, service or policy:
  • First and foremost, perennial grains are a market-based solution. Once an effective perennial grain is developed, its use will be motivated by the self-interest of farmers seeking a profitable outcome—in terms of food production and/or monetary profit—relative to other alternatives. 
  • At the same time, there is an important role for research funded by the government and philanthropy to develop more effective perennial grains that provide sufficient yield and taste to make them viable food crops. 
  • Third, it seems likely there will be a need for different kinds of perennial grains to meet the cultural and agricultural needs of different communities. There's no one-size-fits-all solution, but rather a need for a diverse set of options to supplement traditional agricultural strategies.
So is there a "perennial grain" equivalent for affordable housing? In general, I think there is. But as the discussion below suggests, the analogy will only take you so far. In many markets, there will be a need to marry market-based approaches with public policy solutions to maximize the benefits for consumers.

In my view, the most promising approach to a perennial grain for affordable housing would combine three strategies to significantly lower construction costs. None of these strategies is revolutionary, and all are already being employed to one degree or another. The key, as with perennial grains, is to figure out how to put the whole package together in a way that is sustainable and culturally acceptable. In addition—and here's where we may need to extend beyond the 'perennial grain' comparison—in many markets, steps will be needed to translate the lower housing production costs into greater affordability.

First the three market-based components:
  • Smaller Homes. It's not difficult to build a small home. But it is difficult to build a small home that feels like a larger one and meets the full range of human needs comfortably in a smaller space. Excellent design is arguably more important with smaller homes than larger ones, but it's not clear that most builders will generate the volume needed to justify the up-front design costs. Research could be used to develop and release into the public domain plans and ideas for single-family and multifamily homes that are small but well-designed. Research could also help developers understand whether (and where) there is a market for well-designed smaller homes that would be affordable to people not able to afford larger ones. (N.B. - helpful tips on the housing design of assisted properties may be found here.)
  • Lower-Cost Construction Techniques. There have been many advances in building technology in recent years. But due to challenges in the diffusion of technology, not all of these innovative practices are being widely used. Perhaps the most pressing research need is to develop effective channels for spotlighting the most promising approaches for reducing construction costs and encouraging their adoption. (The products of an earlier research partnership in this area--the Partnership for Advancing Technology in Housing (PATH)--may be found here. This PATH report is particularly on point, if a bit dated.) 
  • Increased Density. Where land costs are high, considerable savings in per-unit housing costs can be achieved by increasing the number of residential housing units to be constructed within a set parcel. Design is again essential here, as the attractiveness of the finished product will be critical to its acceptance. It seems to me that the larger obstacle is public acceptance of density, rather than lack of knowledge about how to produce it. Visualizing Density is an excellent tool for addressing this challenge.
So far, the perennial grains analogy holds up pretty well. But it breaks down in considering how to translate lower production costs into greater affordability. In a market in which there is ample supply and few barriers to entry, competition should keep profit margins in line and allow consumers to benefit from lower housing production costs. But in markets or neighborhoods in which supply is constrained—including many high-priced housing markets—producers may be able to continue to command the same sale prices or rents, notwithstanding lower production costs.

To ensure that lower production costs translate into affordability in supply-constrained markets, it will be important either to rely on (and empower) mission-driven producers who are willing to accept lower profit levels to deliver affordability or to adopt public policy solutions that create incentives or requirements for using these and other strategies to produce affordable homes. Examples include: density bonuses that condition greater density on the inclusion of a certain percentage of affordable homes, voluntary or mandatory inclusionary zoning, and expedited permitting rules for developments that include affordable homes. Policies that dramatically expand supply—such as rezoning formerly industrial areas into residential zones—can also help.

So is there a perennial grain strategy for affordable housing? I guess it depends on whether you choose to see the glass as half-full or half-empty. (Apologies for the mix of metaphors!) I'd say there is, since research-driven innovation and improvements in the dissemination of technology have important roles to play in lowering the costs of producing housing. At the same time, limitations on housing supply loom large, suggesting the importance of adopting public policies that help translate the lower production costs into greater affordability for consumers.


Anonymous said...

Just as a perennial grain would need to have diversity in order to fit the needs and desires of many cultures, such a solution for affordable housing needs to address the cultures of very diverse communities. In particular, I am thinking of rural communities. In rural communities, the affordable housing issue ia often compounded by striking a balance between the actual housing and the need to be able to access products and services. some of the necessary products and services are basic to the rural household's daily life: access to grocery stores, medical services, and job opportunities. Housing isn't always just about the cost of housing. It is about a host of family 9and community) needs. A sustainable "perennial grain" must also be nutritious as well as tasty.

Nandinee said...

Enjoyed reading the Perennial Grain post. I particularly support the development of smaller, sensibly-sized housing units; and market-based solutions. The above comment mentioned diversity. I would like to add this blog I wrote some years ago--Fair, Green, Smart--to the current discussions on Searching for Housing's Perennial Grain.

Naomi Bayer, Enterprise Community Partners said...

Interesting analogy, Jeff. I would add energy and water retrofits to the list of perennial grains--real and recurring savings over the life of the housing, effectively lowering costs and enhancing sustainability. Plus cutting carbon emissions which in this summer of unprecedented heat and violent weahter, we sorely need. Add in renewable technologies and we have a real game changer.

Anonymous said...

A good thought experiment, but the ‘breakdown’ you mention relates to the finite quanta of developable land, which is a constraint imposed partly by nature (oceans, hillsides) and more by people (zoning, building codes, FARs). Several of us explored this in detail in an 'open brainstorming' at the California Housing Consortium annual meeting in May, and I wrote up our long list of ideas in the most recent Tax Credit Advisor. For a copy of the article, email me at dsmith {at} recapadvisors {dot} com.

David Smith, +1 617 502 5913

Rick Keller said...

I heartily agree. I believe that affordable (mixed income) cohousing offers one significant approach as part of the mix of options; comes in many different flavors--multi-generational, mixed tenure (rental/homeowner), senior, ecovillages, veterans, special needs. Retrofit should play an important role in this.

A key issue that needs to be addressed is how to use government housing programs (e.g. LIHTC) effectively. The core strength of cohousing is establishment of trust and mutuality among residents; accomplishing this requires that residents desire to be active participants in the cohousing community. However, it appears that there are significant hurdles in current resident/tenant selection processes including this factor as a part of eligibility.

We need more research to determine what is needed to resolve this issue. The resolution may require both revised program guidelines and a better understanding of the process of best practices for establishing and maintaing a social capital within a cohousing community.