Apartments or Houses for Fredericksburg, TX
As the City of Fredericksburg TX continues to explore solutions to the perceived lack of affordable housing, clear and convincing evidence exists that there is, indeed, a need for this type of product. All one has to do is look at statistics provided by the U.S. Census Bureau, the Texas State Demographer, FISD, the Gillespie County MLS and the Bureau of Labor Statistics (among others) to see that prices continue to trend higher while poverty levels are increasing and wages are not keeping pace with inflation (not to mention home prices).
While some may argue that meeting this demand by granting tax-payer funded incentives to private developers is a bad idea, it has been proven time and again that it is the only idea that works. The “do nothing” alternative presents risks to the community in the form of exacerbating the chronic labor shortages faced by local employers and will (by default) encourage more low-income multi-family development. If people need a roof over their heads, someone will provide it. The question for our community is what kind of roofs do we want to see and live with.
Multi-family developments are certainly not bad things. We’ve all lived in an apartment or two (or eight) in our time. Recognize however that the “business of apartments” has changed dramatically since most of us most likely made that housing choice. Large-scale apartment communities (50+ units) fall into two categories these days; “subsidized” and “securitized”. Subsidized units typically involve some kind of government funding and come with “income qualifying” strings attached. Securitized units are “free market” in the sense that they will charge the highest rates possible (and spend the least in maintenance practicable) to achieve the highest returns for their publicly traded REIT’s.
While each type of unit serves its targeted demographic well, they effectively bookend the low and high end of any given market. What about the “middle”? Who serves that? Who has the ability to serve that? The answer to that is a whole other post, so I’ll stick to my point.
As in the debate on affordable, single-family housing, apartment developers clearly consider land cost and income demographics in their development equations. High land prices and the lower the area incomes virtually assure more projects aimed at the lower end of the apartment spectrum (subsidized). Again, there is nothing wrong with someone meeting an identifiable demand; the question for the community is “how do we want that demand to be met?”
Coming full-circle, the alternative to more taxpayer subsidized multi-family development (yes, local incentives are given to these projects too) is properly incentivized single-family residential development.
“Affordability” can be defined by assessing local income levels, current underwriting criteria and the availability to downpayment assistance programs. Once defined, affordable mortgage amounts can be deduced resulting in target home prices. The cost to construct certain types and configuration of dwellings can be assessed and subtracted to identify the resulting market lot price targets. None of this can be accurately calculated, however, unless and until a clear message is delivered from city officials as to incentive packages that will be granted to projects meeting established criteria.
Is it in the best interest of the community to incentivized development in return for stabilizing the local labor market and/or slowing the spread of taxpayer supported multi-family development? In the special place that is Fredericksburg, TX, I would answer with a resounding YES!
What about those who say “well Jeff, not everyone can afford a house”, or “hey, I had to live in many apartments and save my money for years before I could afford a home”? These are certainly valid statements and are (by the way) very reflective of my own experiences.
These arguments; however, ignore the fact that times have changed. Home prices and inflation are far outpacing the real growth in wages. I suspect that many of us who make these arguments couldn’t achieve what we managed to do then, today.
