Say it with me: ADUs drive housing prices UP not down

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a starter home with a decent sized yard. We could easily fit an ADU and we could pay for it by borrowing against the appreciation in the value of our home. And that would increase the value of our home overnight by probably 30 percent.

How exactly does that help affordable housing? How does that help someone trying to save up to buy their first home, a starter home like ours? All it does it drive the price of our starter home beyond the budget of anyone who would be in the market for a starter home.

I can't tell if the D.C. government is cynical or just stupid in how they portray policies that are designed to enrich developers and people who already own homes as somehow helping everyone else.

1) the income it provides to you helps make your house more affordable
2) the rental unit provides a lower cost option to another person or family

But it DOESN'T make the original property more affordable to the next buyer. It creates cheaper housing in people's backyards for rent. The property itself won't be cheaper after adding an ADU, but more expensive.

Do I have that right?

Yes, the property will be more expensive because there are two units of housing on it instead of one. Just like, generally, a one-acre parcel with 20 units of housing on it will be more expensive than the same parcel with 1 unit of housing on it. It should go without saying that a one-acre parcel with 20 units of housing on it has 20 times as many housing units as a parcel with 1 unit of housing on it.

So what you’re saying is ADUs are zero sum and we have to choose between rental affordability and purchase affordability. If that’s the case, it’s worth a conversation about balancing rental and purchase affordability, because those two things are actually linked. Monthly mortgage payments put a soft cap on rents, so if mortgage payments go up on average, rents have more headroom to grow.

No, that's not what I'm saying. I'm saying that the purpose of ADUs is to add housing units, not to ensure that the PP at the top can afford to buy a "starter" home with a yard big enough to put an ADU in.

It may not be what you’re saying but it’s the effect of what you’re recommending. It’s tricky to balance affordability in the purchase and rental segments and I don’t know what the answer is but some controls to prevent non-resident investors from squeezing out first-time buyers probably are necessary. The investor funding would produce more housing if it were bundled and put into MF high-rise anyway.

Nobody is suggesting that first time buyers will be able to buy a SFH on a large lot near metro under this policy. But they can’t do that now anyways. However they will be able to now live in that same neighborhood in a condo or apartment rather than a SFH w/ yard. That’s the point. Letting people with more modest means access the benefits of transportation and infrastructure.

Since the property with an ADU is only affordable to speculators, who is going to buy them? What's the likelihood that both units would then be rented?

Says who?

Are you questioning the only affordable to speculators part? No one knows how much property values will increase, so that’s unknown.

We do know that property values will increase and that no one that can’t afford a house now will be able to afford a house later because of an ADU. However, more people will have the option to rent in areas where you can build an ADU.

Of course, we don’t know how many would be owner occupied, because I doubt that many people want to go through that expense and also have to share their property, but some will. Otherwise it will be developers buying up properties to develop and sell as multi unit investments.

There are plenty of models for valuing rental properties. Let’s say you can reliably rent a 1BR ADU at a rent that generates $12,000 NOI annually. The risk premium in your market is 500bps above the 10-year Treasury, so the average CAP rate is about 8 percent. That makes the rental worth $150k at sale.

So, to your point, people stretching to afford a property without an ADU will be priced out of the same property with an ADU.

If so, that's ok. I don't know why housing policy should prioritize the desires of people who want to buy large properties near Metro at below-market prices.

Back with the “near metro” strawman. This could be in the backyard of a post-WWII home that’s affordable to the middle class right now. It doesn’t have to be near metro and NOI is going to be more than $12,000 near metro, so the price will push even higher making the economic viability of house-sized MF (which is among the things we actually should be building near metro) even more challenging. Housing advocates are their own worst enemies when it comes to attaining best and highest use.

Something tells me you are not actually in favor of “best and highest use” … btw *the market* determines “best and highest use.” so allowing people to build what they want on their property is how you do that.

No, best and highest use maximizes density especially near transit. You’re at good figuring out what I’m in favor as you are at housing.

Best and highest use is reflected by what someone will pay for.

I get it. You don’t care about inequality or promoting efficient land use over the long term. You want developers to be able to make a quick buck even when what they want to build is at odds with public policy (which is to deliver more units). That’s YIMBYism at its core but most of the time it’s covered up with talking points on equity and climate. Thanks for your honesty.

I’m not the one who was randomly throwing around phrases.

[Anonymous]

Anonymous wrote:

The housing industry isn’t going to build enough housing to drive down prices unless they make a mistake. They’ll build just enough to satisfy demand as the number of people at and above 120 percent AMI grows. They’re much more likely to make a mistake the other way and under build.

But they’ve been great at pushing supply side nonsense to a bunch of gullible progressives and taking all of those tax breaks and subsidies straight to the bottom line.

They used to. Were they just dumber then?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

The housing industry isn’t going to build enough housing to drive down prices unless they make a mistake. They’ll build just enough to satisfy demand as the number of people at and above 120 percent AMI grows. They’re much more likely to make a mistake the other way and under build.

But they’ve been great at pushing supply side nonsense to a bunch of gullible progressives and taking all of those tax breaks and subsidies straight to the bottom line.

They used to. Were they just dumber then?

They were dumber (forecasting wasn’t as good and it was harder to aggregate and analyze rent data) and the business model was different.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a starter home with a decent sized yard. We could easily fit an ADU and we could pay for it by borrowing against the appreciation in the value of our home. And that would increase the value of our home overnight by probably 30 percent.

How exactly does that help affordable housing? How does that help someone trying to save up to buy their first home, a starter home like ours? All it does it drive the price of our starter home beyond the budget of anyone who would be in the market for a starter home.

I can't tell if the D.C. government is cynical or just stupid in how they portray policies that are designed to enrich developers and people who already own homes as somehow helping everyone else.

1) the income it provides to you helps make your house more affordable
2) the rental unit provides a lower cost option to another person or family

But it DOESN'T make the original property more affordable to the next buyer. It creates cheaper housing in people's backyards for rent. The property itself won't be cheaper after adding an ADU, but more expensive.

Do I have that right?

Yes, the property will be more expensive because there are two units of housing on it instead of one. Just like, generally, a one-acre parcel with 20 units of housing on it will be more expensive than the same parcel with 1 unit of housing on it. It should go without saying that a one-acre parcel with 20 units of housing on it has 20 times as many housing units as a parcel with 1 unit of housing on it.

So what you’re saying is ADUs are zero sum and we have to choose between rental affordability and purchase affordability. If that’s the case, it’s worth a conversation about balancing rental and purchase affordability, because those two things are actually linked. Monthly mortgage payments put a soft cap on rents, so if mortgage payments go up on average, rents have more headroom to grow.

No, that's not what I'm saying. I'm saying that the purpose of ADUs is to add housing units, not to ensure that the PP at the top can afford to buy a "starter" home with a yard big enough to put an ADU in.

It may not be what you’re saying but it’s the effect of what you’re recommending. It’s tricky to balance affordability in the purchase and rental segments and I don’t know what the answer is but some controls to prevent non-resident investors from squeezing out first-time buyers probably are necessary. The investor funding would produce more housing if it were bundled and put into MF high-rise anyway.

Nobody is suggesting that first time buyers will be able to buy a SFH on a large lot near metro under this policy. But they can’t do that now anyways. However they will be able to now live in that same neighborhood in a condo or apartment rather than a SFH w/ yard. That’s the point. Letting people with more modest means access the benefits of transportation and infrastructure.

Yes, no one is suggesting it, so why did you bring it up? The greatest threat that ADUs pose to affordability is for 1940s homes on lots that are large relative to footprint of the house. Some of those houses are close to metro (though outside the walkshed), relatively close to downtown, and close to the beltway. Some are currently affordable to purchase for households below AMI. That won’t be the case for houses with ADUs added because any increase in value will put them out of reach.

And it’s a red herring to say ADUs are to improve transit accessibility because they can be built anywhere.

One thing to consider is that for close-in neighborhoods ADUs may suppress the construction of higher density housing where allowed because the builder would offload the risk of the second property to the buyer, while the builder would retain the risk for every unit in a multiplex until it’s sold out.

I think ADUs should be allowed but that we also need regulations that discourage investor activity.

Instead of allowing ADUs, the rational thing is to allow people to subdivide their properties to create separate SFH units. This avoids creating a single property with a huge price and the expectation (and in this case, a requirement if your income isn't sufficient) that you rent out the ADU. Why would banks be leery of giving you a mortgage on a property that requires you to rent? I don't know, maybe COVID? What would have happened to the homeowners with ADUs and rent relief for two years? Please don't tell me the mortgage company was willing to work with people. They didn't offer mortgage forgiveness. They only moved the debt to the end of the loan.

So now you have properties where it will be difficult to get a mortgage. Who can afford these properties? The people who are paying cash. I don't think that describes the typical middle-class homeowner.

Again, allow subdivision so you don't create an army of incompetent landlords.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a starter home with a decent sized yard. We could easily fit an ADU and we could pay for it by borrowing against the appreciation in the value of our home. And that would increase the value of our home overnight by probably 30 percent.

How exactly does that help affordable housing? How does that help someone trying to save up to buy their first home, a starter home like ours? All it does it drive the price of our starter home beyond the budget of anyone who would be in the market for a starter home.

I can't tell if the D.C. government is cynical or just stupid in how they portray policies that are designed to enrich developers and people who already own homes as somehow helping everyone else.

1) the income it provides to you helps make your house more affordable
2) the rental unit provides a lower cost option to another person or family

But it DOESN'T make the original property more affordable to the next buyer. It creates cheaper housing in people's backyards for rent. The property itself won't be cheaper after adding an ADU, but more expensive.

Do I have that right?

Yes, the property will be more expensive because there are two units of housing on it instead of one. Just like, generally, a one-acre parcel with 20 units of housing on it will be more expensive than the same parcel with 1 unit of housing on it. It should go without saying that a one-acre parcel with 20 units of housing on it has 20 times as many housing units as a parcel with 1 unit of housing on it.

So what you’re saying is ADUs are zero sum and we have to choose between rental affordability and purchase affordability. If that’s the case, it’s worth a conversation about balancing rental and purchase affordability, because those two things are actually linked. Monthly mortgage payments put a soft cap on rents, so if mortgage payments go up on average, rents have more headroom to grow.

No, that's not what I'm saying. I'm saying that the purpose of ADUs is to add housing units, not to ensure that the PP at the top can afford to buy a "starter" home with a yard big enough to put an ADU in.

It may not be what you’re saying but it’s the effect of what you’re recommending. It’s tricky to balance affordability in the purchase and rental segments and I don’t know what the answer is but some controls to prevent non-resident investors from squeezing out first-time buyers probably are necessary. The investor funding would produce more housing if it were bundled and put into MF high-rise anyway.

Nobody is suggesting that first time buyers will be able to buy a SFH on a large lot near metro under this policy. But they can’t do that now anyways. However they will be able to now live in that same neighborhood in a condo or apartment rather than a SFH w/ yard. That’s the point. Letting people with more modest means access the benefits of transportation and infrastructure.

Since the property with an ADU is only affordable to speculators, who is going to buy them? What's the likelihood that both units would then be rented?

Says who?

Are you questioning the only affordable to speculators part? No one knows how much property values will increase, so that’s unknown.

We do know that property values will increase and that no one that can’t afford a house now will be able to afford a house later because of an ADU. However, more people will have the option to rent in areas where you can build an ADU.

Of course, we don’t know how many would be owner occupied, because I doubt that many people want to go through that expense and also have to share their property, but some will. Otherwise it will be developers buying up properties to develop and sell as multi unit investments.

There are plenty of models for valuing rental properties. Let’s say you can reliably rent a 1BR ADU at a rent that generates $12,000 NOI annually. The risk premium in your market is 500bps above the 10-year Treasury, so the average CAP rate is about 8 percent. That makes the rental worth $150k at sale.

So, to your point, people stretching to afford a property without an ADU will be priced out of the same property with an ADU.

If so, that's ok. I don't know why housing policy should prioritize the desires of people who want to buy large properties near Metro at below-market prices.

Back with the “near metro” strawman. This could be in the backyard of a post-WWII home that’s affordable to the middle class right now. It doesn’t have to be near metro and NOI is going to be more than $12,000 near metro, so the price will push even higher making the economic viability of house-sized MF (which is among the things we actually should be building near metro) even more challenging. Housing advocates are their own worst enemies when it comes to attaining best and highest use.

Something tells me you are not actually in favor of “best and highest use” … btw *the market* determines “best and highest use.” so allowing people to build what they want on their property is how you do that.

No, best and highest use maximizes density especially near transit. You’re at good figuring out what I’m in favor as you are at housing.

Best and highest use is reflected by what someone will pay for.

I get it. You don’t care about inequality or promoting efficient land use over the long term. You want developers to be able to make a quick buck even when what they want to build is at odds with public policy (which is to deliver more units). That’s YIMBYism at its core but most of the time it’s covered up with talking points on equity and climate. Thanks for your honesty.

I’m not the one who was randomly throwing around phrases.

You kind of were but in any event it seems like the more we take advice from people with your beliefs the worse the housing market gets for buyers and renters. The results of policies you’ve advocated have stunk.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a starter home with a decent sized yard. We could easily fit an ADU and we could pay for it by borrowing against the appreciation in the value of our home. And that would increase the value of our home overnight by probably 30 percent.

How exactly does that help affordable housing? How does that help someone trying to save up to buy their first home, a starter home like ours? All it does it drive the price of our starter home beyond the budget of anyone who would be in the market for a starter home.

I can't tell if the D.C. government is cynical or just stupid in how they portray policies that are designed to enrich developers and people who already own homes as somehow helping everyone else.

1) the income it provides to you helps make your house more affordable
2) the rental unit provides a lower cost option to another person or family

But it DOESN'T make the original property more affordable to the next buyer. It creates cheaper housing in people's backyards for rent. The property itself won't be cheaper after adding an ADU, but more expensive.

Do I have that right?

Yes, the property will be more expensive because there are two units of housing on it instead of one. Just like, generally, a one-acre parcel with 20 units of housing on it will be more expensive than the same parcel with 1 unit of housing on it. It should go without saying that a one-acre parcel with 20 units of housing on it has 20 times as many housing units as a parcel with 1 unit of housing on it.

So what you’re saying is ADUs are zero sum and we have to choose between rental affordability and purchase affordability. If that’s the case, it’s worth a conversation about balancing rental and purchase affordability, because those two things are actually linked. Monthly mortgage payments put a soft cap on rents, so if mortgage payments go up on average, rents have more headroom to grow.

No, that's not what I'm saying. I'm saying that the purpose of ADUs is to add housing units, not to ensure that the PP at the top can afford to buy a "starter" home with a yard big enough to put an ADU in.

It may not be what you’re saying but it’s the effect of what you’re recommending. It’s tricky to balance affordability in the purchase and rental segments and I don’t know what the answer is but some controls to prevent non-resident investors from squeezing out first-time buyers probably are necessary. The investor funding would produce more housing if it were bundled and put into MF high-rise anyway.

Nobody is suggesting that first time buyers will be able to buy a SFH on a large lot near metro under this policy. But they can’t do that now anyways. However they will be able to now live in that same neighborhood in a condo or apartment rather than a SFH w/ yard. That’s the point. Letting people with more modest means access the benefits of transportation and infrastructure.

Yes, no one is suggesting it, so why did you bring it up? The greatest threat that ADUs pose to affordability is for 1940s homes on lots that are large relative to footprint of the house. Some of those houses are close to metro (though outside the walkshed), relatively close to downtown, and close to the beltway. Some are currently affordable to purchase for households below AMI. That won’t be the case for houses with ADUs added because any increase in value will put them out of reach.

And it’s a red herring to say ADUs are to improve transit accessibility because they can be built anywhere.

One thing to consider is that for close-in neighborhoods ADUs may suppress the construction of higher density housing where allowed because the builder would offload the risk of the second property to the buyer, while the builder would retain the risk for every unit in a multiplex until it’s sold out.

I think ADUs should be allowed but that we also need regulations that discourage investor activity.

Instead of allowing ADUs, the rational thing is to allow people to subdivide their properties to create separate SFH units. This avoids creating a single property with a huge price and the expectation (and in this case, a requirement if your income isn't sufficient) that you rent out the ADU. Why would banks be leery of giving you a mortgage on a property that requires you to rent? I don't know, maybe COVID? What would have happened to the homeowners with ADUs and rent relief for two years? Please don't tell me the mortgage company was willing to work with people. They didn't offer mortgage forgiveness. They only moved the debt to the end of the loan.

So now you have properties where it will be difficult to get a mortgage. Who can afford these properties? The people who are paying cash. I don't think that describes the typical middle-class homeowner.

Again, allow subdivision so you don't create an army of incompetent landlords.

I would be 100 percent for this. Great points.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a starter home with a decent sized yard. We could easily fit an ADU and we could pay for it by borrowing against the appreciation in the value of our home. And that would increase the value of our home overnight by probably 30 percent.

How exactly does that help affordable housing? How does that help someone trying to save up to buy their first home, a starter home like ours? All it does it drive the price of our starter home beyond the budget of anyone who would be in the market for a starter home.

I can't tell if the D.C. government is cynical or just stupid in how they portray policies that are designed to enrich developers and people who already own homes as somehow helping everyone else.

1) the income it provides to you helps make your house more affordable
2) the rental unit provides a lower cost option to another person or family

But it DOESN'T make the original property more affordable to the next buyer. It creates cheaper housing in people's backyards for rent. The property itself won't be cheaper after adding an ADU, but more expensive.

Do I have that right?

Yes, the property will be more expensive because there are two units of housing on it instead of one. Just like, generally, a one-acre parcel with 20 units of housing on it will be more expensive than the same parcel with 1 unit of housing on it. It should go without saying that a one-acre parcel with 20 units of housing on it has 20 times as many housing units as a parcel with 1 unit of housing on it.

So what you’re saying is ADUs are zero sum and we have to choose between rental affordability and purchase affordability. If that’s the case, it’s worth a conversation about balancing rental and purchase affordability, because those two things are actually linked. Monthly mortgage payments put a soft cap on rents, so if mortgage payments go up on average, rents have more headroom to grow.

No, that's not what I'm saying. I'm saying that the purpose of ADUs is to add housing units, not to ensure that the PP at the top can afford to buy a "starter" home with a yard big enough to put an ADU in.

It may not be what you’re saying but it’s the effect of what you’re recommending. It’s tricky to balance affordability in the purchase and rental segments and I don’t know what the answer is but some controls to prevent non-resident investors from squeezing out first-time buyers probably are necessary. The investor funding would produce more housing if it were bundled and put into MF high-rise anyway.

Nobody is suggesting that first time buyers will be able to buy a SFH on a large lot near metro under this policy. But they can’t do that now anyways. However they will be able to now live in that same neighborhood in a condo or apartment rather than a SFH w/ yard. That’s the point. Letting people with more modest means access the benefits of transportation and infrastructure.

Yes, no one is suggesting it, so why did you bring it up? The greatest threat that ADUs pose to affordability is for 1940s homes on lots that are large relative to footprint of the house. Some of those houses are close to metro (though outside the walkshed), relatively close to downtown, and close to the beltway. Some are currently affordable to purchase for households below AMI. That won’t be the case for houses with ADUs added because any increase in value will put them out of reach.

And it’s a red herring to say ADUs are to improve transit accessibility because they can be built anywhere.

One thing to consider is that for close-in neighborhoods ADUs may suppress the construction of higher density housing where allowed because the builder would offload the risk of the second property to the buyer, while the builder would retain the risk for every unit in a multiplex until it’s sold out.

I think ADUs should be allowed but that we also need regulations that discourage investor activity.

Yes, discouraging investment in housing is totally the way to increase housing supply.

Also, I’m curious how they would do that. I thought that the idea behind allowing ADUs and “upzoning” was to give more people the ability to do things by right. Now they are going to invent rules to hinder that?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a starter home with a decent sized yard. We could easily fit an ADU and we could pay for it by borrowing against the appreciation in the value of our home. And that would increase the value of our home overnight by probably 30 percent.

How exactly does that help affordable housing? How does that help someone trying to save up to buy their first home, a starter home like ours? All it does it drive the price of our starter home beyond the budget of anyone who would be in the market for a starter home.

I can't tell if the D.C. government is cynical or just stupid in how they portray policies that are designed to enrich developers and people who already own homes as somehow helping everyone else.

1) the income it provides to you helps make your house more affordable
2) the rental unit provides a lower cost option to another person or family

But it DOESN'T make the original property more affordable to the next buyer. It creates cheaper housing in people's backyards for rent. The property itself won't be cheaper after adding an ADU, but more expensive.

Do I have that right?

Yes, the property will be more expensive because there are two units of housing on it instead of one. Just like, generally, a one-acre parcel with 20 units of housing on it will be more expensive than the same parcel with 1 unit of housing on it. It should go without saying that a one-acre parcel with 20 units of housing on it has 20 times as many housing units as a parcel with 1 unit of housing on it.

So what you’re saying is ADUs are zero sum and we have to choose between rental affordability and purchase affordability. If that’s the case, it’s worth a conversation about balancing rental and purchase affordability, because those two things are actually linked. Monthly mortgage payments put a soft cap on rents, so if mortgage payments go up on average, rents have more headroom to grow.

No, that's not what I'm saying. I'm saying that the purpose of ADUs is to add housing units, not to ensure that the PP at the top can afford to buy a "starter" home with a yard big enough to put an ADU in.

It may not be what you’re saying but it’s the effect of what you’re recommending. It’s tricky to balance affordability in the purchase and rental segments and I don’t know what the answer is but some controls to prevent non-resident investors from squeezing out first-time buyers probably are necessary. The investor funding would produce more housing if it were bundled and put into MF high-rise anyway.

Nobody is suggesting that first time buyers will be able to buy a SFH on a large lot near metro under this policy. But they can’t do that now anyways. However they will be able to now live in that same neighborhood in a condo or apartment rather than a SFH w/ yard. That’s the point. Letting people with more modest means access the benefits of transportation and infrastructure.

Since the property with an ADU is only affordable to speculators, who is going to buy them? What's the likelihood that both units would then be rented?

Says who?

Are you questioning the only affordable to speculators part? No one knows how much property values will increase, so that’s unknown.

We do know that property values will increase and that no one that can’t afford a house now will be able to afford a house later because of an ADU. However, more people will have the option to rent in areas where you can build an ADU.

Of course, we don’t know how many would be owner occupied, because I doubt that many people want to go through that expense and also have to share their property, but some will. Otherwise it will be developers buying up properties to develop and sell as multi unit investments.

There are plenty of models for valuing rental properties. Let’s say you can reliably rent a 1BR ADU at a rent that generates $12,000 NOI annually. The risk premium in your market is 500bps above the 10-year Treasury, so the average CAP rate is about 8 percent. That makes the rental worth $150k at sale.

So, to your point, people stretching to afford a property without an ADU will be priced out of the same property with an ADU.

If so, that's ok. I don't know why housing policy should prioritize the desires of people who want to buy large properties near Metro at below-market prices.

Back with the “near metro” strawman. This could be in the backyard of a post-WWII home that’s affordable to the middle class right now. It doesn’t have to be near metro and NOI is going to be more than $12,000 near metro, so the price will push even higher making the economic viability of house-sized MF (which is among the things we actually should be building near metro) even more challenging. Housing advocates are their own worst enemies when it comes to attaining best and highest use.

Something tells me you are not actually in favor of “best and highest use” … btw *the market* determines “best and highest use.” so allowing people to build what they want on their property is how you do that.

No, best and highest use maximizes density especially near transit. You’re at good figuring out what I’m in favor as you are at housing.

Best and highest use is reflected by what someone will pay for.

I get it. You don’t care about inequality or promoting efficient land use over the long term. You want developers to be able to make a quick buck even when what they want to build is at odds with public policy (which is to deliver more units). That’s YIMBYism at its core but most of the time it’s covered up with talking points on equity and climate. Thanks for your honesty.

I’m not the one who was randomly throwing around phrases.

You kind of were but in any event it seems like the more we take advice from people with your beliefs the worse the housing market gets for buyers and renters. The results of policies you’ve advocated have stunk.

DP. No, it does not seem like that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a starter home with a decent sized yard. We could easily fit an ADU and we could pay for it by borrowing against the appreciation in the value of our home. And that would increase the value of our home overnight by probably 30 percent.

How exactly does that help affordable housing? How does that help someone trying to save up to buy their first home, a starter home like ours? All it does it drive the price of our starter home beyond the budget of anyone who would be in the market for a starter home.

I can't tell if the D.C. government is cynical or just stupid in how they portray policies that are designed to enrich developers and people who already own homes as somehow helping everyone else.

1) the income it provides to you helps make your house more affordable
2) the rental unit provides a lower cost option to another person or family

But it DOESN'T make the original property more affordable to the next buyer. It creates cheaper housing in people's backyards for rent. The property itself won't be cheaper after adding an ADU, but more expensive.

Do I have that right?

Yes, the property will be more expensive because there are two units of housing on it instead of one. Just like, generally, a one-acre parcel with 20 units of housing on it will be more expensive than the same parcel with 1 unit of housing on it. It should go without saying that a one-acre parcel with 20 units of housing on it has 20 times as many housing units as a parcel with 1 unit of housing on it.

So what you’re saying is ADUs are zero sum and we have to choose between rental affordability and purchase affordability. If that’s the case, it’s worth a conversation about balancing rental and purchase affordability, because those two things are actually linked. Monthly mortgage payments put a soft cap on rents, so if mortgage payments go up on average, rents have more headroom to grow.

No, that's not what I'm saying. I'm saying that the purpose of ADUs is to add housing units, not to ensure that the PP at the top can afford to buy a "starter" home with a yard big enough to put an ADU in.

It may not be what you’re saying but it’s the effect of what you’re recommending. It’s tricky to balance affordability in the purchase and rental segments and I don’t know what the answer is but some controls to prevent non-resident investors from squeezing out first-time buyers probably are necessary. The investor funding would produce more housing if it were bundled and put into MF high-rise anyway.

Nobody is suggesting that first time buyers will be able to buy a SFH on a large lot near metro under this policy. But they can’t do that now anyways. However they will be able to now live in that same neighborhood in a condo or apartment rather than a SFH w/ yard. That’s the point. Letting people with more modest means access the benefits of transportation and infrastructure.

Yes, no one is suggesting it, so why did you bring it up? The greatest threat that ADUs pose to affordability is for 1940s homes on lots that are large relative to footprint of the house. Some of those houses are close to metro (though outside the walkshed), relatively close to downtown, and close to the beltway. Some are currently affordable to purchase for households below AMI. That won’t be the case for houses with ADUs added because any increase in value will put them out of reach.

And it’s a red herring to say ADUs are to improve transit accessibility because they can be built anywhere.

One thing to consider is that for close-in neighborhoods ADUs may suppress the construction of higher density housing where allowed because the builder would offload the risk of the second property to the buyer, while the builder would retain the risk for every unit in a multiplex until it’s sold out.

I think ADUs should be allowed but that we also need regulations that discourage investor activity.

Yes, discouraging investment in housing is totally the way to increase housing supply.

Also, I’m curious how they would do that. I thought that the idea behind allowing ADUs and “upzoning” was to give more people the ability to do things by right. Now they are going to invent rules to hinder that?

For ADUs, require owner occupancy of one unit, increase homestead exemptions while raising property tax rates, etc. Make it uneconomical for hedge funds to vacuum up affordable housing stock.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a starter home with a decent sized yard. We could easily fit an ADU and we could pay for it by borrowing against the appreciation in the value of our home. And that would increase the value of our home overnight by probably 30 percent.

How exactly does that help affordable housing? How does that help someone trying to save up to buy their first home, a starter home like ours? All it does it drive the price of our starter home beyond the budget of anyone who would be in the market for a starter home.

I can't tell if the D.C. government is cynical or just stupid in how they portray policies that are designed to enrich developers and people who already own homes as somehow helping everyone else.

1) the income it provides to you helps make your house more affordable
2) the rental unit provides a lower cost option to another person or family

But it DOESN'T make the original property more affordable to the next buyer. It creates cheaper housing in people's backyards for rent. The property itself won't be cheaper after adding an ADU, but more expensive.

Do I have that right?

Yes, the property will be more expensive because there are two units of housing on it instead of one. Just like, generally, a one-acre parcel with 20 units of housing on it will be more expensive than the same parcel with 1 unit of housing on it. It should go without saying that a one-acre parcel with 20 units of housing on it has 20 times as many housing units as a parcel with 1 unit of housing on it.

So what you’re saying is ADUs are zero sum and we have to choose between rental affordability and purchase affordability. If that’s the case, it’s worth a conversation about balancing rental and purchase affordability, because those two things are actually linked. Monthly mortgage payments put a soft cap on rents, so if mortgage payments go up on average, rents have more headroom to grow.

No, that's not what I'm saying. I'm saying that the purpose of ADUs is to add housing units, not to ensure that the PP at the top can afford to buy a "starter" home with a yard big enough to put an ADU in.

It may not be what you’re saying but it’s the effect of what you’re recommending. It’s tricky to balance affordability in the purchase and rental segments and I don’t know what the answer is but some controls to prevent non-resident investors from squeezing out first-time buyers probably are necessary. The investor funding would produce more housing if it were bundled and put into MF high-rise anyway.

Nobody is suggesting that first time buyers will be able to buy a SFH on a large lot near metro under this policy. But they can’t do that now anyways. However they will be able to now live in that same neighborhood in a condo or apartment rather than a SFH w/ yard. That’s the point. Letting people with more modest means access the benefits of transportation and infrastructure.

Since the property with an ADU is only affordable to speculators, who is going to buy them? What's the likelihood that both units would then be rented?

Says who?

Are you questioning the only affordable to speculators part? No one knows how much property values will increase, so that’s unknown.

We do know that property values will increase and that no one that can’t afford a house now will be able to afford a house later because of an ADU. However, more people will have the option to rent in areas where you can build an ADU.

Of course, we don’t know how many would be owner occupied, because I doubt that many people want to go through that expense and also have to share their property, but some will. Otherwise it will be developers buying up properties to develop and sell as multi unit investments.

There are plenty of models for valuing rental properties. Let’s say you can reliably rent a 1BR ADU at a rent that generates $12,000 NOI annually. The risk premium in your market is 500bps above the 10-year Treasury, so the average CAP rate is about 8 percent. That makes the rental worth $150k at sale.

So, to your point, people stretching to afford a property without an ADU will be priced out of the same property with an ADU.

If so, that's ok. I don't know why housing policy should prioritize the desires of people who want to buy large properties near Metro at below-market prices.

Back with the “near metro” strawman. This could be in the backyard of a post-WWII home that’s affordable to the middle class right now. It doesn’t have to be near metro and NOI is going to be more than $12,000 near metro, so the price will push even higher making the economic viability of house-sized MF (which is among the things we actually should be building near metro) even more challenging. Housing advocates are their own worst enemies when it comes to attaining best and highest use.

Something tells me you are not actually in favor of “best and highest use” … btw *the market* determines “best and highest use.” so allowing people to build what they want on their property is how you do that.

No, best and highest use maximizes density especially near transit. You’re at good figuring out what I’m in favor as you are at housing.

Best and highest use is reflected by what someone will pay for.

I get it. You don’t care about inequality or promoting efficient land use over the long term. You want developers to be able to make a quick buck even when what they want to build is at odds with public policy (which is to deliver more units). That’s YIMBYism at its core but most of the time it’s covered up with talking points on equity and climate. Thanks for your honesty.

I’m not the one who was randomly throwing around phrases.

You kind of were but in any event it seems like the more we take advice from people with your beliefs the worse the housing market gets for buyers and renters. The results of policies you’ve advocated have stunk.

Dude you're the one stupidly throwing around phrases like "highest and best use" while valiantly (and deceptively) arguing that people should not be allowed to build on *their own property.* You are a NIMBY through and through, worried that your precious neighborhood will be invaded by evil renters.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a starter home with a decent sized yard. We could easily fit an ADU and we could pay for it by borrowing against the appreciation in the value of our home. And that would increase the value of our home overnight by probably 30 percent.

How exactly does that help affordable housing? How does that help someone trying to save up to buy their first home, a starter home like ours? All it does it drive the price of our starter home beyond the budget of anyone who would be in the market for a starter home.

I can't tell if the D.C. government is cynical or just stupid in how they portray policies that are designed to enrich developers and people who already own homes as somehow helping everyone else.

1) the income it provides to you helps make your house more affordable
2) the rental unit provides a lower cost option to another person or family

But it DOESN'T make the original property more affordable to the next buyer. It creates cheaper housing in people's backyards for rent. The property itself won't be cheaper after adding an ADU, but more expensive.

Do I have that right?

Yes, the property will be more expensive because there are two units of housing on it instead of one. Just like, generally, a one-acre parcel with 20 units of housing on it will be more expensive than the same parcel with 1 unit of housing on it. It should go without saying that a one-acre parcel with 20 units of housing on it has 20 times as many housing units as a parcel with 1 unit of housing on it.

So what you’re saying is ADUs are zero sum and we have to choose between rental affordability and purchase affordability. If that’s the case, it’s worth a conversation about balancing rental and purchase affordability, because those two things are actually linked. Monthly mortgage payments put a soft cap on rents, so if mortgage payments go up on average, rents have more headroom to grow.

No, that's not what I'm saying. I'm saying that the purpose of ADUs is to add housing units, not to ensure that the PP at the top can afford to buy a "starter" home with a yard big enough to put an ADU in.

It may not be what you’re saying but it’s the effect of what you’re recommending. It’s tricky to balance affordability in the purchase and rental segments and I don’t know what the answer is but some controls to prevent non-resident investors from squeezing out first-time buyers probably are necessary. The investor funding would produce more housing if it were bundled and put into MF high-rise anyway.

Nobody is suggesting that first time buyers will be able to buy a SFH on a large lot near metro under this policy. But they can’t do that now anyways. However they will be able to now live in that same neighborhood in a condo or apartment rather than a SFH w/ yard. That’s the point. Letting people with more modest means access the benefits of transportation and infrastructure.

Yes, no one is suggesting it, so why did you bring it up? The greatest threat that ADUs pose to affordability is for 1940s homes on lots that are large relative to footprint of the house. Some of those houses are close to metro (though outside the walkshed), relatively close to downtown, and close to the beltway. Some are currently affordable to purchase for households below AMI. That won’t be the case for houses with ADUs added because any increase in value will put them out of reach.

And it’s a red herring to say ADUs are to improve transit accessibility because they can be built anywhere.

One thing to consider is that for close-in neighborhoods ADUs may suppress the construction of higher density housing where allowed because the builder would offload the risk of the second property to the buyer, while the builder would retain the risk for every unit in a multiplex until it’s sold out.

I think ADUs should be allowed but that we also need regulations that discourage investor activity.

Instead of allowing ADUs, the rational thing is to allow people to subdivide their properties to create separate SFH units. This avoids creating a single property with a huge price and the expectation (and in this case, a requirement if your income isn't sufficient) that you rent out the ADU. Why would banks be leery of giving you a mortgage on a property that requires you to rent? I don't know, maybe COVID? What would have happened to the homeowners with ADUs and rent relief for two years? Please don't tell me the mortgage company was willing to work with people. They didn't offer mortgage forgiveness. They only moved the debt to the end of the loan.

So now you have properties where it will be difficult to get a mortgage. Who can afford these properties? The people who are paying cash. I don't think that describes the typical middle-class homeowner.

Again, allow subdivision so you don't create an army of incompetent landlords.

I would be 100 percent for this. Great points.

I'm not against this, but in effect, you'd be creating a lot of easements. (b/c ADU often can only be accessed from the main house). Or I guess condos, effectively, if the ADU is attached to the main house?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a starter home with a decent sized yard. We could easily fit an ADU and we could pay for it by borrowing against the appreciation in the value of our home. And that would increase the value of our home overnight by probably 30 percent.

How exactly does that help affordable housing? How does that help someone trying to save up to buy their first home, a starter home like ours? All it does it drive the price of our starter home beyond the budget of anyone who would be in the market for a starter home.

I can't tell if the D.C. government is cynical or just stupid in how they portray policies that are designed to enrich developers and people who already own homes as somehow helping everyone else.

1) the income it provides to you helps make your house more affordable
2) the rental unit provides a lower cost option to another person or family

But it DOESN'T make the original property more affordable to the next buyer. It creates cheaper housing in people's backyards for rent. The property itself won't be cheaper after adding an ADU, but more expensive.

Do I have that right?

Yes, the property will be more expensive because there are two units of housing on it instead of one. Just like, generally, a one-acre parcel with 20 units of housing on it will be more expensive than the same parcel with 1 unit of housing on it. It should go without saying that a one-acre parcel with 20 units of housing on it has 20 times as many housing units as a parcel with 1 unit of housing on it.

So what you’re saying is ADUs are zero sum and we have to choose between rental affordability and purchase affordability. If that’s the case, it’s worth a conversation about balancing rental and purchase affordability, because those two things are actually linked. Monthly mortgage payments put a soft cap on rents, so if mortgage payments go up on average, rents have more headroom to grow.

No, that's not what I'm saying. I'm saying that the purpose of ADUs is to add housing units, not to ensure that the PP at the top can afford to buy a "starter" home with a yard big enough to put an ADU in.

It may not be what you’re saying but it’s the effect of what you’re recommending. It’s tricky to balance affordability in the purchase and rental segments and I don’t know what the answer is but some controls to prevent non-resident investors from squeezing out first-time buyers probably are necessary. The investor funding would produce more housing if it were bundled and put into MF high-rise anyway.

Nobody is suggesting that first time buyers will be able to buy a SFH on a large lot near metro under this policy. But they can’t do that now anyways. However they will be able to now live in that same neighborhood in a condo or apartment rather than a SFH w/ yard. That’s the point. Letting people with more modest means access the benefits of transportation and infrastructure.

Yes, no one is suggesting it, so why did you bring it up? The greatest threat that ADUs pose to affordability is for 1940s homes on lots that are large relative to footprint of the house. Some of those houses are close to metro (though outside the walkshed), relatively close to downtown, and close to the beltway. Some are currently affordable to purchase for households below AMI. That won’t be the case for houses with ADUs added because any increase in value will put them out of reach.

And it’s a red herring to say ADUs are to improve transit accessibility because they can be built anywhere.

One thing to consider is that for close-in neighborhoods ADUs may suppress the construction of higher density housing where allowed because the builder would offload the risk of the second property to the buyer, while the builder would retain the risk for every unit in a multiplex until it’s sold out.

I think ADUs should be allowed but that we also need regulations that discourage investor activity.

Yes, discouraging investment in housing is totally the way to increase housing supply.

Also, I’m curious how they would do that. I thought that the idea behind allowing ADUs and “upzoning” was to give more people the ability to do things by right. Now they are going to invent rules to hinder that?

PP believes in upzoning as long as its by the metro and not in PPs neighborhood

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a starter home with a decent sized yard. We could easily fit an ADU and we could pay for it by borrowing against the appreciation in the value of our home. And that would increase the value of our home overnight by probably 30 percent.

How exactly does that help affordable housing? How does that help someone trying to save up to buy their first home, a starter home like ours? All it does it drive the price of our starter home beyond the budget of anyone who would be in the market for a starter home.

I can't tell if the D.C. government is cynical or just stupid in how they portray policies that are designed to enrich developers and people who already own homes as somehow helping everyone else.

1) the income it provides to you helps make your house more affordable
2) the rental unit provides a lower cost option to another person or family

But it DOESN'T make the original property more affordable to the next buyer. It creates cheaper housing in people's backyards for rent. The property itself won't be cheaper after adding an ADU, but more expensive.

Do I have that right?

Yes, the property will be more expensive because there are two units of housing on it instead of one. Just like, generally, a one-acre parcel with 20 units of housing on it will be more expensive than the same parcel with 1 unit of housing on it. It should go without saying that a one-acre parcel with 20 units of housing on it has 20 times as many housing units as a parcel with 1 unit of housing on it.

So what you’re saying is ADUs are zero sum and we have to choose between rental affordability and purchase affordability. If that’s the case, it’s worth a conversation about balancing rental and purchase affordability, because those two things are actually linked. Monthly mortgage payments put a soft cap on rents, so if mortgage payments go up on average, rents have more headroom to grow.

No, that's not what I'm saying. I'm saying that the purpose of ADUs is to add housing units, not to ensure that the PP at the top can afford to buy a "starter" home with a yard big enough to put an ADU in.

It may not be what you’re saying but it’s the effect of what you’re recommending. It’s tricky to balance affordability in the purchase and rental segments and I don’t know what the answer is but some controls to prevent non-resident investors from squeezing out first-time buyers probably are necessary. The investor funding would produce more housing if it were bundled and put into MF high-rise anyway.

Nobody is suggesting that first time buyers will be able to buy a SFH on a large lot near metro under this policy. But they can’t do that now anyways. However they will be able to now live in that same neighborhood in a condo or apartment rather than a SFH w/ yard. That’s the point. Letting people with more modest means access the benefits of transportation and infrastructure.

Yes, no one is suggesting it, so why did you bring it up? The greatest threat that ADUs pose to affordability is for 1940s homes on lots that are large relative to footprint of the house. Some of those houses are close to metro (though outside the walkshed), relatively close to downtown, and close to the beltway. Some are currently affordable to purchase for households below AMI. That won’t be the case for houses with ADUs added because any increase in value will put them out of reach.

And it’s a red herring to say ADUs are to improve transit accessibility because they can be built anywhere.

One thing to consider is that for close-in neighborhoods ADUs may suppress the construction of higher density housing where allowed because the builder would offload the risk of the second property to the buyer, while the builder would retain the risk for every unit in a multiplex until it’s sold out.

I think ADUs should be allowed but that we also need regulations that discourage investor activity.

Instead of allowing ADUs, the rational thing is to allow people to subdivide their properties to create separate SFH units. This avoids creating a single property with a huge price and the expectation (and in this case, a requirement if your income isn't sufficient) that you rent out the ADU. Why would banks be leery of giving you a mortgage on a property that requires you to rent? I don't know, maybe COVID? What would have happened to the homeowners with ADUs and rent relief for two years? Please don't tell me the mortgage company was willing to work with people. They didn't offer mortgage forgiveness. They only moved the debt to the end of the loan.

So now you have properties where it will be difficult to get a mortgage. Who can afford these properties? The people who are paying cash. I don't think that describes the typical middle-class homeowner.

Again, allow subdivision so you don't create an army of incompetent landlords.

I would be 100 percent for this. Great points.

I'm not against this, but in effect, you'd be creating a lot of easements. (b/c ADU often can only be accessed from the main house). Or I guess condos, effectively, if the ADU is attached to the main house?

DP, but if you subdivide you could do so down the middle on some lots and with flag lots for others.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a starter home with a decent sized yard. We could easily fit an ADU and we could pay for it by borrowing against the appreciation in the value of our home. And that would increase the value of our home overnight by probably 30 percent.

How exactly does that help affordable housing? How does that help someone trying to save up to buy their first home, a starter home like ours? All it does it drive the price of our starter home beyond the budget of anyone who would be in the market for a starter home.

I can't tell if the D.C. government is cynical or just stupid in how they portray policies that are designed to enrich developers and people who already own homes as somehow helping everyone else.

1) the income it provides to you helps make your house more affordable
2) the rental unit provides a lower cost option to another person or family

But it DOESN'T make the original property more affordable to the next buyer. It creates cheaper housing in people's backyards for rent. The property itself won't be cheaper after adding an ADU, but more expensive.

Do I have that right?

Yes, the property will be more expensive because there are two units of housing on it instead of one. Just like, generally, a one-acre parcel with 20 units of housing on it will be more expensive than the same parcel with 1 unit of housing on it. It should go without saying that a one-acre parcel with 20 units of housing on it has 20 times as many housing units as a parcel with 1 unit of housing on it.

So what you’re saying is ADUs are zero sum and we have to choose between rental affordability and purchase affordability. If that’s the case, it’s worth a conversation about balancing rental and purchase affordability, because those two things are actually linked. Monthly mortgage payments put a soft cap on rents, so if mortgage payments go up on average, rents have more headroom to grow.

No, that's not what I'm saying. I'm saying that the purpose of ADUs is to add housing units, not to ensure that the PP at the top can afford to buy a "starter" home with a yard big enough to put an ADU in.

It may not be what you’re saying but it’s the effect of what you’re recommending. It’s tricky to balance affordability in the purchase and rental segments and I don’t know what the answer is but some controls to prevent non-resident investors from squeezing out first-time buyers probably are necessary. The investor funding would produce more housing if it were bundled and put into MF high-rise anyway.

Nobody is suggesting that first time buyers will be able to buy a SFH on a large lot near metro under this policy. But they can’t do that now anyways. However they will be able to now live in that same neighborhood in a condo or apartment rather than a SFH w/ yard. That’s the point. Letting people with more modest means access the benefits of transportation and infrastructure.

Yes, no one is suggesting it, so why did you bring it up? The greatest threat that ADUs pose to affordability is for 1940s homes on lots that are large relative to footprint of the house. Some of those houses are close to metro (though outside the walkshed), relatively close to downtown, and close to the beltway. Some are currently affordable to purchase for households below AMI. That won’t be the case for houses with ADUs added because any increase in value will put them out of reach.

And it’s a red herring to say ADUs are to improve transit accessibility because they can be built anywhere.

One thing to consider is that for close-in neighborhoods ADUs may suppress the construction of higher density housing where allowed because the builder would offload the risk of the second property to the buyer, while the builder would retain the risk for every unit in a multiplex until it’s sold out.

I think ADUs should be allowed but that we also need regulations that discourage investor activity.

Yes, discouraging investment in housing is totally the way to increase housing supply.

Also, I’m curious how they would do that. I thought that the idea behind allowing ADUs and “upzoning” was to give more people the ability to do things by right. Now they are going to invent rules to hinder that?

PP believes in upzoning as long as its by the metro and not in PPs neighborhood

DP, but up zoning should be by the metro, which is my neighborhood. Why should we be promoting density in areas where you have to drive everywhere?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a starter home with a decent sized yard. We could easily fit an ADU and we could pay for it by borrowing against the appreciation in the value of our home. And that would increase the value of our home overnight by probably 30 percent.

How exactly does that help affordable housing? How does that help someone trying to save up to buy their first home, a starter home like ours? All it does it drive the price of our starter home beyond the budget of anyone who would be in the market for a starter home.

I can't tell if the D.C. government is cynical or just stupid in how they portray policies that are designed to enrich developers and people who already own homes as somehow helping everyone else.

1) the income it provides to you helps make your house more affordable
2) the rental unit provides a lower cost option to another person or family

But it DOESN'T make the original property more affordable to the next buyer. It creates cheaper housing in people's backyards for rent. The property itself won't be cheaper after adding an ADU, but more expensive.

Do I have that right?

Yes, the property will be more expensive because there are two units of housing on it instead of one. Just like, generally, a one-acre parcel with 20 units of housing on it will be more expensive than the same parcel with 1 unit of housing on it. It should go without saying that a one-acre parcel with 20 units of housing on it has 20 times as many housing units as a parcel with 1 unit of housing on it.

So what you’re saying is ADUs are zero sum and we have to choose between rental affordability and purchase affordability. If that’s the case, it’s worth a conversation about balancing rental and purchase affordability, because those two things are actually linked. Monthly mortgage payments put a soft cap on rents, so if mortgage payments go up on average, rents have more headroom to grow.

No, that's not what I'm saying. I'm saying that the purpose of ADUs is to add housing units, not to ensure that the PP at the top can afford to buy a "starter" home with a yard big enough to put an ADU in.

It may not be what you’re saying but it’s the effect of what you’re recommending. It’s tricky to balance affordability in the purchase and rental segments and I don’t know what the answer is but some controls to prevent non-resident investors from squeezing out first-time buyers probably are necessary. The investor funding would produce more housing if it were bundled and put into MF high-rise anyway.

Nobody is suggesting that first time buyers will be able to buy a SFH on a large lot near metro under this policy. But they can’t do that now anyways. However they will be able to now live in that same neighborhood in a condo or apartment rather than a SFH w/ yard. That’s the point. Letting people with more modest means access the benefits of transportation and infrastructure.

Yes, no one is suggesting it, so why did you bring it up? The greatest threat that ADUs pose to affordability is for 1940s homes on lots that are large relative to footprint of the house. Some of those houses are close to metro (though outside the walkshed), relatively close to downtown, and close to the beltway. Some are currently affordable to purchase for households below AMI. That won’t be the case for houses with ADUs added because any increase in value will put them out of reach.

And it’s a red herring to say ADUs are to improve transit accessibility because they can be built anywhere.

One thing to consider is that for close-in neighborhoods ADUs may suppress the construction of higher density housing where allowed because the builder would offload the risk of the second property to the buyer, while the builder would retain the risk for every unit in a multiplex until it’s sold out.

I think ADUs should be allowed but that we also need regulations that discourage investor activity.

Instead of allowing ADUs, the rational thing is to allow people to subdivide their properties to create separate SFH units. This avoids creating a single property with a huge price and the expectation (and in this case, a requirement if your income isn't sufficient) that you rent out the ADU. Why would banks be leery of giving you a mortgage on a property that requires you to rent? I don't know, maybe COVID? What would have happened to the homeowners with ADUs and rent relief for two years? Please don't tell me the mortgage company was willing to work with people. They didn't offer mortgage forgiveness. They only moved the debt to the end of the loan.

So now you have properties where it will be difficult to get a mortgage. Who can afford these properties? The people who are paying cash. I don't think that describes the typical middle-class homeowner.

Again, allow subdivision so you don't create an army of incompetent landlords.

I would be 100 percent for this. Great points.

I'm not against this, but in effect, you'd be creating a lot of easements. (b/c ADU often can only be accessed from the main house). Or I guess condos, effectively, if the ADU is attached to the main house?

DP, but if you subdivide you could do so down the middle on some lots and with flag lots for others.

Or you could just allow multiple units on the same property, without subdivision...