Reply to We need homes. A lot of homes. Not just affordable, but also middle-income homes.

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Reply to "We need homes. A lot of homes. Not just affordable, but also middle-income homes."

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[quote=Anonymous][quote=Anonymous]Many cities here have ADU ordinances already. Do you know why they aren’t being built? The market, even the investor market which ironically would shut out new owners, won’t support it.

Even somewhat off the hook, you’re talking about a custom house, $150K, for a studio or studio plus, that may only rent for $1,200 a month. That’s a CAP rate of about 9%, but pretty average or even below average for Class B or worse property.

Easier than that is an index fund. Less risk, less work, more liquidity, and I don’t have to deal with landlord issues. That’s in an area that respects property rights. DC? Forget about it. I’d want at least 12% to make it worth my wild, and then no other issues, but at that point I’ll still take easy.

That’s why certain homes aren’t built. Everyone “needs” to get at least 4-8% off the deal, and if they don’t, it doesn’t happen and many don’t.[/quote]

Sorry, this is wrong.  We're not talking about building tiny mini-houses adjacent to one SFH.  Although in some cases this might help, it's not upzoning.
First the true parts: yes, index funds (over the last 10 years when the market went up 5+% per year) are often better investments than RE. But they're uncorrelated and RE can help diversity a portfolio.

Onto the rest:

What we need is BY-RIGHT construction of 3-6 dwelling units on SFH-zoned lots.  And, by-right, allow building higher: 4-8 stories.  Yes, owners will hate this.  You will hate it!  NIMBYs will hate it. But it's the only way to increase housing units in DC.

I hesitate to engage your flawed economic analysis, but I will, briefly: take a $1.2 M SFH and lot.  A developer buys it.  Builds 6 units over 6 stories on that lot.  Sells each for $500,000.  Total revenue: $3M.  Capital cost: 1.2M.  Construction cost: say $1.5M.  Profit for owner: $300k.  Prices for other units in DC then go down because demand slightly decreases.

This is simple.

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