There seems to be a pretty sharp lower bound on how cheap a living situation (e.g. rent on an apartment) can be in the parts of the United States I’m familiar with. I would have thought that there would be demand for cheap-but-bad housing on the part of people with low income. Here are some hypotheses I’ve come up with for explaining this, and I’d appreciate anyone who has relevant knowledge commenting if I’m on track:
There is in fact very little such demand in the US because people who can afford any kind of rent at all have grown accustomed to a certain standard of living.
The cost of complying with health and safety regulations makes it too expensive to price rent below a certain amount even at the worst the rental situation is legally allowed to be.
The people who would try to rent as cheaply as possible are also the people who are least likely to pay their rent (e.g. due to job insecurity), and landlords don’t want to take on the additional risk.
There’s also zoning laws. For instance, I live in DC, where there’s a height cap on buildings, which makes it impossible to build towering, cheap, apartment buildings. (much to my sorrow).
That zoning law exists to keep buildings from blocking views of the Capitol, but a lot of other zoning laws exist exactly to prevent cheap apartments, because the people active in the zoning process don’t want to live near the kind of people who would live in cheap apartments.
Robert Moses, from my home state of NY, is particularly famous for this kind of things. In addition to zoning, he also made sure that buses weren’t allowed on some Long Island roads, or that bridge overpasses would be too low to fit buses under, to prevent people who rely on public transportation from traveling to certain neighborhoods and beaches.
The cost of complying with health and safety regulations makes it too expensive to price rent below a certain amount even at the worst the rental situation is legally allowed to be.
By any name, they are the largest source of unsubsidized affordable housing in the country. There are seven million manufactured homes housing 18 million people. In some counties they make up 60 percent of dwellings. Approximately one out of every 12 Floridians lives in a manufactured home. Units built since 1976, when the Department of Housing and Urban Development started regulating their construction, can last as long as site-built homes when they’re well built and maintained. Yet they cost far less: $41 per square foot versus $85 per square foot and up. At least one study, from the University of Illinois-Chicago, on trailer parks in Omaha, Nebraska, found that crime rates in mobile-home parks are the same as the rest of the community; the parks do not cause crime nearby; and that the parks appear to depress crime levels because residents own their homes. In one survey, nine out of 10 owners of manufactured homes said they were satisfied with their dwellings. They’ve found a housing option that suited their budget and needs.
The middle class would prefer that people be homeless than that they have permanent dwellings that do not reach their standards. None of your explanations is correct but the second comes closest. See Flophouse. I believe Matthew Yglesias has written on this and there’s a commenter on slatestarcodex, St. Rev, who may or may not have a blog, who’s homeless.
The opportunity cost of the land may be higher than you think. How far from a major population area are you looking?
Transaction costs (an expansion of your third point) are higher than you think.
Do an estimate of what it would take for you to set up a group home in the areas you are willing to live. If you’re lucky, you will be able to find partners and get it going for a bit under going rental rates. If not, you’ll learn a lot and be able to report back here.
One possible reason is that many of the relevant aspects of good or bad housing are governed by building codes (plumbing, HVAC, bathrooms, room size, etc.) which put a (often high) lower bound on how cheap a building can be built. In addition, the organization of the construction industry (many specialized subcontractors) means there’s a fairly high fixed cost for any new construction. While this mostly applies to new construction, it can apply to existing buildings as well.
I completely agree with you. In my opinion, the proper standard of housing should be maintain. There should be a council related with the housing specification rules. To read more about real estate visit my site. http://www.kevinbradleyrealtor.com/
You may be looking in the wrong places. SRO arrangements are still a thing, albeit a declining one, but as far as I can tell they don’t get advertised anywhere a middle-class tenant would find them.
There seems to be a pretty sharp lower bound on how cheap a living situation (e.g. rent on an apartment) can be in the parts of the United States I’m familiar with. I would have thought that there would be demand for cheap-but-bad housing on the part of people with low income. Here are some hypotheses I’ve come up with for explaining this, and I’d appreciate anyone who has relevant knowledge commenting if I’m on track:
There is in fact very little such demand in the US because people who can afford any kind of rent at all have grown accustomed to a certain standard of living.
The cost of complying with health and safety regulations makes it too expensive to price rent below a certain amount even at the worst the rental situation is legally allowed to be.
The people who would try to rent as cheaply as possible are also the people who are least likely to pay their rent (e.g. due to job insecurity), and landlords don’t want to take on the additional risk.
There’s also zoning laws. For instance, I live in DC, where there’s a height cap on buildings, which makes it impossible to build towering, cheap, apartment buildings. (much to my sorrow).
That zoning law exists to keep buildings from blocking views of the Capitol, but a lot of other zoning laws exist exactly to prevent cheap apartments, because the people active in the zoning process don’t want to live near the kind of people who would live in cheap apartments.
Robert Moses, from my home state of NY, is particularly famous for this kind of things. In addition to zoning, he also made sure that buses weren’t allowed on some Long Island roads, or that bridge overpasses would be too low to fit buses under, to prevent people who rely on public transportation from traveling to certain neighborhoods and beaches.
Height caps are overrated. Paris is five times denser than DC, but I believe that its height limits were stricter in the 20th century.
There’s also zoning and other issues, and subtler ones like licensing of construction trades, etc. But this seems to be a big part of the story. From last year http://www.psmag.com/navigation/politics-and-law/how-the-trailer-park-could-save-us-all-55137/
Commentary: http://econlog.econlib.org/archives/2013/04/why_trailers_in.html
Not paying rent is the least of the problems with bad tenants. There is a long tail of risk, such as destroying the building.
The middle class would prefer that people be homeless than that they have permanent dwellings that do not reach their standards. None of your explanations is correct but the second comes closest. See Flophouse. I believe Matthew Yglesias has written on this and there’s a commenter on slatestarcodex, St. Rev, who may or may not have a blog, who’s homeless.
The opportunity cost of the land may be higher than you think. How far from a major population area are you looking?
Transaction costs (an expansion of your third point) are higher than you think.
Do an estimate of what it would take for you to set up a group home in the areas you are willing to live. If you’re lucky, you will be able to find partners and get it going for a bit under going rental rates. If not, you’ll learn a lot and be able to report back here.
What do you mean by “bad” housing?
One possible reason is that many of the relevant aspects of good or bad housing are governed by building codes (plumbing, HVAC, bathrooms, room size, etc.) which put a (often high) lower bound on how cheap a building can be built. In addition, the organization of the construction industry (many specialized subcontractors) means there’s a fairly high fixed cost for any new construction. While this mostly applies to new construction, it can apply to existing buildings as well.
I completely agree with you. In my opinion, the proper standard of housing should be maintain. There should be a council related with the housing specification rules. To read more about real estate visit my site. http://www.kevinbradleyrealtor.com/
You may be looking in the wrong places. SRO arrangements are still a thing, albeit a declining one, but as far as I can tell they don’t get advertised anywhere a middle-class tenant would find them.
What parts are you familiar with? This makes a drastic difference.
You also have to take into account public housing projects and rent assistance programs.