Reply to The Daily episode on the housing crisis

Forum Index » Real Estate

Reply to "The Daily episode on the housing crisis"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous] There are simply not enough units. I saw many buildings in small suburban and rural areas being bought up by people from big cities who saw they could buy low and rent high, and due to demand they can get by with making little to no improvements. Imagine living in a 10 or 20 story building without a working elevator and being disabled, elderly, or with a young child….It’s now the norm. 
The competition for the available units is fierce. 3x monthly income of rent and very good credit score, and that is still not enough.
The old mom and pop owners can’t keep up, and often turn to property management firms that charge more than expected and force them to raise rents. 
We need more housing. Period. Especially centrally located urban area where people can walk to stores and transit. I know it’s not easy to convert office buildings, [b]but it must be seriously considered to alleviate the problems.[/b] [/quote]

It's being seriously considered everywhere because its an easy idea that doesn't piss off people already living in residential areas.  It basically doesn't work unless you can charge super high end rents.  The conversion costs are so high that the vast majority of office buildings don't work economically to convert to apartments.  Not saying it isn't part of the solution, but it's like 5% of it.[/quote]

I think it's also just a longer term solution that is evolving. I do think ultimately if work trends hold that it will fundamentally transform what urban cores look like with fewer office buildings and more housing and tourism. I think in DC for instance people would love to waive a magic wand and change the composition of downtown to tilt more heavily toward apartment units and hotels because with WFH these uses would produce more people on the streets and thus more business for restaurants and retail. The loss of daily office workers has had a brutal ripple effect on all the businesses who who used to serve the office workers and it creates a downward spiral.

However as you said converting office buildings to housing (or hotels) si not a quick or inexpensive fix. In most cases it involves a total gut and rebuild and some buildings will never be suitable for housing because of the structure itself. This is a project that could take 20 years. But people want solutions to both the housing shortage AND the impact of remote work on urban centers right now. It sounds good but unless we develop better methods for conversion it's not a right now solution.

There is also the risk that remote trends aren't as permanent as some think and that demand for those downtown office buildings could return sooner than people think. I work in strategy consulting within several private industries and there's not a consensus on this -- you would be surprised at how many people (including younger people who were previously a lot more enthusiastic about remote work) are souring on how it's impact workplace culture and morale and think it greatly diminishes the quality and enjoyment people take in their work. For some industries I think remote work is here to stay but for a surprising number of people in industries like law and finance there is a growing unhappiness with it as it currently functions.[/quote]

I don't think anyone wants to return to the office 5x a week unless their living conditions are terrible.  When young people say they want to be in person it's primarily because they want to have some social lives and go somewhere fun during the day for change of scenery.  Totally expected.  But they don't want to spend all their days in chaotic open floor offices or dreary cube farms, they want flexibility and using offices primarily for social interaction and collaboration work. This won't create enough demand for sprawling office floors where every employee gets an assigned desk, companies wont' pay for empty desks.  I can see companies returning back to smaller offices and reducing footprint, which will still leave huge inventory of unused office buildings.

I'd say each building can be evaluated for plausibility of conversion and the buildings that absolutely cannot be practically converted should remain as office buildings and every other office building that can be converted should be prioritized and converted.  The problem is that resulting housing wont' be affordable.  Nothing can be affordable if MAINTENANCE costs a lot of money with labor/materials costs.  Construction costs are also high as is land in premium locations everyone wants.  Affordable units would have to be tiny. Micro-appartments for single people as well as dorm like units with shared kitchens might be the future of affordable housing for singles not earning much who want their own units and not have roommates.  [/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics