The Space Between

The twin clapboard houses that contractor Norman Scotland built side-by-side on Warburton Avenue are what one might expect to find in Westchester County, N.Y. Modest in scale and colonial in flavor, you almost wouldn't know they were newly constructed just a couple of years ago. And with their enviable views of the Hudson River, you'd never guess that they are affordable for-sale duplexes set above apartment flats, with the flats designated as rental housing for low-income tenants.

When the village of Hastings-on-Hudson donated the two 1/3-acre parcels for residential development, it did so with the requirement that each of the paired homes be sold to a family making no more than 65 percent of the area median income (for a two-person household, that amounted to just under $45,000 per year). The buyers who now occupy the top half of each duplex—a single mom who works as a railroad conductor and a school custodian/volunteer firefighter/EMT whose wife is a homemaker—serve as landlords for the tenants below, using the rental income to help offset their mortgage payments.

With their local architecture, the Hastings duplexes effectively diffused NIMBY fears about streetscape eyesores and compromised property values. But getting to the closing date wasn't easy. The approval process for this small infill venture (located in a historic district) took four years, and the oddball site posed tremendous construction challenges, given its 20-foot drop in grade over a 30-foot run of the buildings. By the end of the two-year build-out, Scotland managed to eke out a tiny profit, but it wasn't much.

“I could have sold the houses as we were building them,” says the Yonkers, N.Y.–based builder. “Every day people came by and offered me all kinds of money because they overlook the river. Some were offering half a million.” Per the land deal with the local Housing Action Council, however, each home sold for about $200,000 in a market where the median home price is $500,000.

MAKING THE GRADE: The affordable duplexes on Warburton Avenue are carved into a sloping parcel that most considered unbuildable. The units were bid and built at $117 per square foot, with more than 150 cubic yards of concrete retaining walls. Authentic clapboard siding was a requirement, per historic district guidelines. Project name: Hastings Housing; Location: Hastings-on-Hudson, N.Y.; Builder: Landscot, Yonkers, N.Y.; Architect: Duo Dickinson Architect, Madison, Conn.; Project size: Two duplexes (ownership units above rental flats) on .3 and .29 acres, respectively; Price per home: $200,000; Square footage: 1,400 square feet (ownership residences); 600 square feet (rental units); Area median income: $59,200; Median home price: $500,000 courtesy duo dickinson architect

In many ways, the Hastings project exemplifies why so many builders are reluctant to venture into affordable housing (lots of headaches, little payoff). At the same time, some see it as a shining example of how the housing landscape can and should be reformulated to allow displaced essential workers such as teachers, first responders, and municipal employees to once again live in the communities they serve.

Project name: Hastings Housing; Location: Hastings-on-Hudson, N.Y.; Builder: Landscot, Yonkers, N.Y.; Architect: Duo Dickinson Architect, Madison, Conn.; Project size: Two duplexes (ownership units above rental flats) on .3 and .29 acres, respectively; Price per home: $200,000; Square footage: 1,400 square feet (ownership residences); 600 square feet (rental units); Area median income: $59,200; Median home price: $500,000 courtesy duo dickinson architect

Proximity to employment is no small matter when it comes to making housing affordable. In recent years, droves of low-to moderate-income families have moved farther from their jobs in search of homes in their price range, only to wake up to the unsavory revelation that the amount they've saved on housing has been eclipsed by commuting expenses. A 2006 study of 28 major metro areas by the Center for Housing Policy found that the average working family (defined as one earning anywhere from minimum wage to 120 percent of the local area median income) spends 28 percent of its total income on housing and roughly 30 percent on transportation.

With hordes of would-be home buyers having no choice but to “drive to qualify”—often as far as 65 miles from work (and sometimes much farther) to find homes they can afford—it's easy to understand how transportation costs have come to gobble up such a large share of household budgets. Gas prices are at an all-time high, and in many cases public transit lines do not extend into exurban territory. The vast majority of workforce commuters (more than 85 percent), drive private vehicles to work, according to the Center for Housing Policy study.

Commuting concerns were partly what compelled the 1999 groundbreaking of Wellington, a compact neighborhood just 1.3 miles from the ski mecca of Breckenridge, Colo., offering modest workforce housing for middle-income families. With average single-family home prices topping $800,000 in Summit County, many of the workers who kept the resort town's chic boutiques and swank restaurants in business were commuting up to 45 minutes over snowy mountain passes to find mortgages or rents they could afford.

Boulder, Colo.–based developers David O'Neil, John Wolff, and Tom Lyon (working collaboratively under the name Poplar-house) saw an opportunity to counter the trend by transforming 22 acres of an adjacent brownfield site (a former mining property bought on the cheap as unincorporated land) into a picturesque village just minutes from downtown Breckenridge via circulator bus. Of the 122 homes built in phase one of Wellington, 98 were offered at below–market-rate prices ($220,000 for a two-bedroom duplex; $281,000 for a three-bedroom, single-family home) to local workers making 90 percent to 120 percent of the area median income. The remaining houses, offered at market value (around $375,000), were sold with the caveat that they could not be rented out for less than six months—the idea being to discourage seasonal occupancy. Deed restrictions on the affordable homes limit real estate appreciation to 3 percent annually or the percentage increase of the area median income (whichever is greater).

Zoning concessions allowing for greater density played a significant role in making the math work, says Dan McCrerey, president of Frisco, Colo.–based Traditional Neighborhood Builders, a construction entity formed for the creation of Wellington. In this case, the town planning agency's willingness to amend the county's standard four-units-per-acre metric allowed for more efficient land use.

Phase two of Wellington is now underway and will include a total of 160 new single-family and duplex homes on 20 acres (128 deed-restricted and 32 market-rate), clustered at six to eight units per acre.

With conventional subdivisions in outer-ring suburbs selling like hotcakes at the height of the real estate boom, builders had little incentive to pan back and rethink the landscape with affordability in mind. Now that tide may be turning. Researchers at the Center for Urban Policy Research at Rutgers University and the Brookings Institution recently went so far as to calculate the societal cost of exurban building in a 10-year study that resulted in the book, Sprawl Costs: Economic Impacts of Unchecked Development. That study concluded that with compact community design such as that seen in Wellington (higher-density housing with proximity to jobs, retail, and transit) as an alternative to subdivision sprawl, development costs for infrastructure such as roads, water, sewer, schools, and emergency response could be reduced nationwide by $420 billion over the next 20 years. In the process, the cost of buying a home would drop, as would the taxes necessary for roads and infrastructure, contends study author Dr. Robert Burchell.

“It seems so much simpler to buy farmland at the edge and build a familiar housing subdivision, but in the long run, this is a more costly strategy for everyone,” Burchell, co-director of the Center for Urban Policy Research, said in a press release. “If just a modest percentage of this growth were more compact, the savings we reap as a society overall would be huge.” The study estimates that a 25 percent shift from low-density development to more compact growth would reduce the average cost of a home by $16,000.

Urbanism is often touted as a panacea for what ails us, insofar as tight-knit, walkable communities have the ability to make the “live, work, play” paradigm of daily existence more localized. The result is a reduction in what John McIlwain, senior resident fellow and chair for housing at the Urban Land Institute, refers to as “house miles.”

GOOD MANORS: With their gracious, antebellum façades, the affordable “apartment mansions” lining the canals of The New Town at St. Charles don't look like affordable housing. Project name: The New Town at St. Charles; Location: St. Charles, Mo.; Builder/Developer: Whittaker Homes, St. Charles; Land planner: Duany Plater-Zyberk & Co., Miami; Project size: 5,700 homes on 747 acres (at build-out); Price range: $120s to $1 million+; Area median income: $68,500

“The cost of living in low-density areas and using an automobile to pick up a quart of milk or the dry cleaning or the kids at school is going to become increasingly problematic [with rising energy costs],” McIlwain observed in a 2006 keynote speech at Pace University's Real Estate Law Institute. “How many miles does it take to connect a house to all the things that are needed? If a car is always used to transport those needs, one has many house miles, and those house miles become more expensive each year. Consequently, houses with fewer house miles actually are becoming more affordable to live in.”

Smart-growth advocates and New Urbanists have long blamed the proliferation of low-density subdivisions for the growing chasm between the housing haves and have-nots. A central argument is that neighborhoods offering only one house size and no access to public transit are exclusionary by design. The better alternative, they say, are mixed-income communities integrating a range of dwelling types at varying price points.

Some traditional tract developers have converted to this line of thinking. In 2002, St. Charles, Mo.–based Whittaker Homes made the decision to shift its focus from cul-de-sacs to compact, small town–like communities offering “homes for nearly every budget.” For Whittaker, this calculated move was made not simply out of goodwill for mankind and the environment, but also because portfolio diversification seemed smart. The builder had already tested an affordable product with good results (selling 400 homes in one year with a base price of $86,000) and realized that homes catering to the lower end of the income scale could help speed absorption rates and breathe life into fledgling communities fast.

When Whittaker broke ground on The New Town at St. Charles, its acclaimed, large-scale New Urbanist community outside St. Louis, the master plan called for a fair number of million-dollar detached homes, but its fourplex rental “apartment mansions,” at 20 units to the acre, were the first structures to go up. “We recognized early that in order to get commercial in town, you have to have a lot of residents, so we started with the higher-density stuff first,” says Tim Busse, vice president and director of architecture for the Midwestern builder. “We also knew from experience that you can sell with better velocity if you keep your price points low in at least some of the housing mix. When we embraced the idea of more rooftops for our retail, we were able to close more houses more quickly.”

The apartment mansions also played an important role in establishing New Town's architectural flavor. “St. Louis is a strong homeowner-driven market, so it was important for our apartment buildings to look like single-family homes,” says Busse, who also serves as town architect for New Town. When wealthier home buyers visiting New Town began requesting single-family elevations with the same two-story porches found exclusively on the apartment mansions he knew they had succeeded. “People were asking us, can you design our house to look like the apartment buildings?” Busse recalls. “You don't see that happening too often.”

The next homes to make their debut in New Town were for-sale 1,024-square-foot cottages on small lots, with a base price of $129,900. “For us, affordability is not about making things cheap, repetitive, or ugly, but rather keeping things very small,” says Busse. But he concedes that builders operating outside the parameters of a form-based TND often have their hands tied by zoning that discourages small-lot development. Not-so-big homes are much easier to pull off in planned communities that allow for tighter site plans, shorter setbacks, and smaller footprints.

Project name: The New Town at St. Charles; Location: St. Charles, Mo.; Builder/Developer: Whittaker Homes, St. Charles; Land planner: Duany Plater-Zyberk & Co., Miami; Project size: 5,700 homes on 747 acres (at build-out); Price range: $120s to $1 million+; Area median income: $68,500

“The rest of the country has minimum square footage requirements, and if you build a two-story house, you have to build, say, at least 1,800 square feet,” he acknowledges. “Before New Town, we had no choice but to build homes to meet those [specifications]. The problem is, our communities need people working in the coffee house and the corner grocery store ... and they can't afford homes that big. Square-footage requirements have become laws that keep affordability out.”

Now entering its third year, New Town is still an ongoing experiment, and whether it will retain long-term bragging rights as a reasonably priced gem offering something for everyone remains to be seen. With New Urbanist communities presently comprising only a tiny fraction of the total U.S. housing landscape, demand for cute houses and walkable neighborhoods has sparked such rampant price escalation that even the smallest homes in many New Urban enclaves have become unattainable for the middle-class families they were originally built to serve. By the time the Florida community of Seaside (the inspiration behind New Town, and arguably the country's most emulated New Urbanist prototype) celebrated its 25th anniversary at the height of the real estate boom in 2005, some of its larger homes were commanding as much as $6 million on the resale market.

Therein lies the rub. While social reform and affordability may be intrinsic to urbanist ideology, market forces in many locales have conspired to create a far different reality. Research by Dr. Emily Talen, an associate professor in the department of urban and regional planning at University of Illinois, confirms it. In a recent analysis of 152 New Urbanist communities nationwide, only 15 percent had homes that were attainable for a family earning the area's median income, and only 10 percent had homes that were affordable to an individual making the median teacher's salary for the area. Only one community in the study had housing that was affordable to a person earning the prevailing wage as a cook in a public school cafeteria. The study excluded communities built with inclusionary zoning mandates, those with rental units in the housing mix, and those built, in part, with government funding such as Hope VI grants—suggesting that these ingredients may, in fact, be essential in producing lasting affordable solutions.

“If we want to create vibrant places, not just tourist destinations, we have to have diverse people living in them,” says Talen, who was recently tapped to co-chair a Congress for New Urbanism Task Force on Affordable Housing. “And to create places that are diverse, we have to confront affordable housing. It is social justice, but it is also what good places need to survive.”

FIRST RESORT: The population of Breckenridge, Colo., fluctuates seasonally, but roughly 90 percent of homeowners in the adjacent Wellington neighborhood are year-round residents, including nurses, waitresses, and government employees. Project name: Wellington; Location: Breckenridge, Colo.; Developer: Poplar-house, Breckenridge; Builder: Traditional Neighborhood Builders, Frisco, Colo.; Land planner: Wolf Lyon Architects, Boulder, Colo.; Project size: 282 homes on 40 acres; Price range: $220,000 to $338,900 (affordable); up to $546,900 (market rate); Area median income: $81,600 (Boulder) courtesy poplar wellington

In the meantime, builders struggling to do the right thing, provide desperately needed housing and tread lightly on the environment, all the while turning a profit in the midst of a down market, aren't finding an easy road to navigate.

“Affordable profit is an oxymoron,” says McCrerey, looking back on all that it's taken to get Wellington out of the ground, from zoning easements to value engineering to fee waivers. “This has been more a labor of love than about making large dollars. It's a lifestyle thing. Hey, we still get free lift tickets.”

Project name: Wellington; Location: Breckenridge, Colo.; Developer: Poplar-house, Breckenridge; Builder: Traditional Neighborhood Builders, Frisco, Colo.; Land planner: Wolf Lyon Architects, Boulder, Colo.; Project size: 282 homes on 40 acres; Price range: $220,000 to $338,900 (affordable); up to $546,900 (market rate); Area median income: $81,600 (Boulder) courtesy poplar wellington

An affordable duplex project solves a catch-22 for first responders.

Nicholas T. Frascone has been a member of the volunteer fire department in the village of Hastings-on-Hudson, N.Y., (population 8,000) since 1996. For years, he and his wife rented an apartment in town for $1,000 a month so Frascone could live close to his day job as a custodian for the local school district. They considered moving north in search of a home they could afford, but the move would have meant a 45-minute commute, and volunteer firefighters, as first responders, are required to live in town. Relocation to a different zip code would have meant giving up that post.

When the Hastings-on-Hudson Housing Action Council announced plans in 2003 to build two affordable ownership duplexes for town residents making less than 65 percent of the area median income, Frascone was among the first to fill out an application. “It's very hard to live in Westchester,” says Frascone, who now also serves as a lieutenant in the Hastings Volunteer Ambulance Corps. “My firehouse is 100 years old and sits on a street of million-dollar homes. You've gotta make a lot of money to live here. Then again, in order to qualify for affordable housing, you can't make a lot of money, but you still have to have some sort of financial track record.”

As owners of one of the duplexes on Warburton Avenue, the Frascones now manage monthly mortgage payments of $1,600, which are offset by the $800 in rental income they receive each month from the tenant who lives in the bottom half of the duplex. The tenant is a fellow volunteer firefighter and public school janitor who underwent a similar application process to qualify for affordable rental housing.

There are contingencies to the Frascones' homeownership agreement, including a 12-year grant restriction (which requires them to repay $50,000 in grants in the event of resale before the 12-year mark) and a deed restriction that caps property appreciation at 2 percent per year.

Now an active member of the Hastings Affordable Housing Committee, Frascone intends to help shepherd other affordable projects coming down the pike. “I want to help out and provide guidance to others who want to know how they can qualify,” he says.

Not-so-big homes relieve small households from paying for more than they need.

As a UPS driver outside St. Louis, Glenn Abrams racks up about 80 miles per day on the odometer. The last thing he wants to deal with at the end of a long haul is traffic on the way home. That was partly what compelled him to buy a small cottage (sight unseen) in The New Town at St. Charles before the greenfield that was to become the TND held anything more than a sales center.

“Before, my commute was about half an hour, but I'd often hit some pretty major traffic on the way home,” says Abrams, 50, who moved into his new digs two years ago. “Now I live 12 minutes from work.”

There were other motivations, too. After 23 years in a larger home, Abrams wanted to downsize to a place where one could find less house, but more quality of life. “My old neighborhood was going downhill,” he says. “Businesses were moving, all the good restaurants and night life had left, and there were drug dealers.” By contrast, New Town has bike trails, canals stocked with fish, restaurants and stores within walking distance, and free outdoor movies on Friday nights. Four other UPS drivers also live in the community with their families, he says.

With its spectrum of housing options catering to buyers at all different price points, New Town had just the right home for Abrams. As a single guy, he wanted to shed the shackles of home maintenance to a degree, but he still craved a small yard of his own. He found what he was looking for in a 1,024-square-foot cottage with a two-car garage, oriented in a court configuration facing a shared green. The base price of the home was $129,000; with add-ons, the closing price came to $157,000.

“I am pretty conservative, and I could have afforded more than I bought,” he says, “but why pay more money for more house when you don't need it?”