Sunday, August 27, 2006


Mini Houses

A solution to the affordability crisis.

Who says that bigger is better?

The affordability indexes of all large urban centers in the United States and Canada are reaching disproportionate levels these days, ranking North America in third place after East Asia and Europe on the scale of the world’s most unaffordable places when it comes to housing. Tokyo and Hong Kong, with an average resale value of U.S.$1,100 and U.S.$900 per square foot approximately have turned into cities of sardines, with people reduced to live in 300 square foot cubicles to afford a roof over their heads. And here in North America we are poised to follow suit pretty soon.

The affordability crisis is a very serious matter indeed. It has economic, political, social and demographic reverberations and repercussions. The primary culprit and cause of the crisis is the ratio between wages and real estate market values. This ratio is entirely skewed to values. Whereas, for example, market values in metropolitan areas in Canada have appreciated an average of fifteen percent per year for the past five years - or a total of seventy-five percent since 2001, salaries have increased an average of four percent per annum – or twenty percent total. There is, therefore, a fifty-five percent gap, which accounts for the problem buyers are facing today when it comes to go to the bank and qualifying for a loan.

In the past few years consumers have tried to obviate to the crisis of affordability by relocating or purchasing farther away from the urban core. But with prices of gasoline higher today anywhere from twenty to twenty-five percent than they were in 2004, and with the expectation looming on the horizon that price of crude will top the $80 per barrel in the relatively near future, long commuting is increasingly putting a dent in the convenience of living well out into suburbia. Additionally, researchers peg the cost per bbl. at a staggering US $100 by 2010. If this condition will occur, the average consumer will pay US$60 for a tank fill up in 2010 as opposed to US$40 today. Moreover, the oil industry anticipates that the world global output will have peaked by the year 2015, which then is a sure sign that from then on the US $100 per bbl. price tag will be there to stay for a very long time.

As such and in light of the foregoing, cities in North America, which are already energy inefficient, are destined to become even more and more so. It is going to cost too much to commute from one side of town, where one lives, to the other side of town, where one works, even with carpools or public transit. It will become too expensive to heat and light 2,500 square foot homes when, in fact, most people can enjoy them only in their free time over the weekend. A recent study undertaken on behalf of the US Department of Energy details that home heating costs can be expected to skyrocket in the forthcoming years. For example, the Department of Energy predicts that homes heated with natural gas could see their fuel costs explode by as much as 48 percent by 2007. And the cost of home heating oil could surge by up to 32 percent. It is the general consensus, therefore, of those involved in economic anticipatory forecasting, that by the end of the decade consumers will mostly demand smaller living quarters, and more affordable.

For all the foregoing reasons, municipalities across the continent are focusing on developing a number of new housing types, and testing their feasibility. Work includes an extensive review of small-scale housing projects across Canada and the United States, as well as discussions with local housing developers about economic viability and marketability. These new housing types are also reviewed and refined in consultation with staff from Planning, Engineering, Housing, Real Estate, Fire Prevention officials and City Building inspectors.

Often overlooked, but an important design consideration affecting the total energy used by the home, is the size of the home. Recent statistics compiled by the US Department of Energy show that new homes on average use more energy than older homes, partially due to larger size, increased use of air-conditioning, and the widespread use of numerous electronics. While home size will likely be determined by factors other than energy efficiency, considerations are now on the drawing board as to whether the same function can be delivered in a smaller package. The general idea behind all these efforts is to provide additional capacity for ground-oriented housing. The hope is to offer a more affordable alternative to the single-family home, while maintaining many of the desirable qualities of this type of housing. Providing these choices within the city core is important to long term growth and sustainability.

The basic parameters guiding the writing of the new construction projects vary from town to town, and take into account factors such as density, size and values of existing developments, as well as anticipatory demand based upon public response obtained by random surveys, which show support and interest for similar forms of housing. Plus, guidelines are laid out to ensure attractive building design, quality materials, landscaping and neighbourhood fit.

For example, a Policy Report and Project Study undertaken here by the City of Vancouver for the Standing Committee on Planning and Environment to put up one such type of housing development in the Kingsway and Knight Corridor – pretty much in the centre of town - has determined the following guidelines:

[ ] a 4.9m (16 ft.) front yard per lot;

[ ] a maximum height of 2.5 storeys and 10.7m (35 ft.) per single-family dwelling;

[ ] parking at grade, accessed from the lane or the courtyard;

[ ] typical unit sizes of 60.4m2 to 130.1m2 (650 to 1,400ft.2) depending on site size;

[ ] construction cost estimated at CAD $110.00 per sq. ft., or between CAD $71,500 and CAD $154,000 per dwelling, depending on size and inclusive of developer’s profit;

[ ] estimated selling price per unit between CAD $270,000 through CAD $350,000.

More importantly, the City of Vancouver anticipates that over a 20-year period, the redevelopment of the entire neighbourhood would generate approximately 800 net additional units for 2,500 more residents, over and above what might be expected if the zoning were to remain unchanged.

Architects and home designers are coming to grips with the realization that comfort has almost nothing at all to do with how big a space is but, rather, that it is attained by tailoring our houses to fit the way we really live. This, coupled by the opportunity given to contain an ever more rampant crisis of affordability, makes the concept of mini-houses a sure winning bet with real estate consumers in the very short term.

Luigi Frascati

As Featured On Ezine Articles Platinum Author

Real Estate Chronicle

Comments: Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?

MSN Search
Blog Directory & Search engine Directory of Real Estate Blogs Find Blogs in the Blog Directory Blog Directory & Search engine Listed in LS Blogs Subscribe in NewsGator Online Subscribe in Bloglines Blogarama - The Blogs Directory FindingBlog - Blog Directory Real Estate Chronicle Linkscout Search & Promotion System! eXTReMe Tracker Traffic Exchange with 100,000+ members