Atlanta’s Affordability Challenge
For the first time in a decade, owning a home in metro Atlanta has become “unaffordable” according to the Atlanta Federal Reserve Bank. What does that mean for our region? For years, Atlanta has led the nation in income inequality and lack of economic mobility. In fact, if a person is born into poverty in Atlanta, there is just a 4% chance of escaping poverty in their lifetime. With homeownership considered the primary vehicle for economic mobility, and the region’s non-white households faring worse economically than white households in Atlanta, what could housing advocates and leaders be doing to address this issue?
Reinvestment Fund is a mission-driven financial institution and champion of housing affordability. With an office in Atlanta, we are curious to know how local housing leaders are responding to this challenge, so we reached out to a few of them to get their insights: Justin Bleeker of Grove Park Renewal; Joel Dixon of Urban Oasis Development; and Eric Kronberg of Kronberg Urbanists + Architects. Here is what they shared.
When did you see this coming?
Justin Bleeker: Atlanta has been on a trajectory of increasing housing prices for the past 10 years or so. In the Westside communities where I live and work, it’s been most pronounced in the past three or four years with the advent of the Westside Park.
Eric Kronberg: Three to four years ago. Atlanta Regional Commission’s growth projections have been out for over a decade. We’ve been tracking housing production versus population immigration expectations. We are so woefully underdelivering housing that a coming crisis was pretty plain.
What can Atlanta’s housing leaders do now?
Joel Dixon: We need urgent acquisition and control of properties across the entire southside (south of 20) and westside (all the way to 285). We need urgency in building housing on city-owned land, etc. (including former Atlanta Housing public housing sites) with a much faster pace in executing on RFPs, development agreements, etc. We need urgency in promoting affordable home ownership models and housing alongside affordable rental housing. We need to better engage and ensure that the philanthropic community and corporate community understands that affordable housing is a top three issue impacting people and this city. It needs to be properly supported and funded as such. Less plans, more action.
Eric Kronberg: Understand that a core part of the crisis is fundamentally a supply side issue. Adding 20,000 units of housing in the next 8 years isn’t appropriate. We need to be looking at ways to add an additional 10,000 unit of housing PER YEAR. We need to start looking at land use policy approaches that would be commensurate with this scale of problem. The failed housing reforms of last year weren’t nearly enough, but they were a start. Picking the pieces back up from that is a ready to go place to begin.
Justin Bleeker: We need leadership in public/private/non-profit sectors that projects a hopeful, but honest future. Many hard decisions, especially in public policy need to be made now. We’re heading toward another epidemic: homelessness. We’re already in triage mode now. The most vulnerable populations are feeling the housing pinch most. We anticipate a significant increase in homelessness throughout this year into next due to the significant increase in cost of housing. Thus, housing leaders’ energy must primarily focus on increasing housing supply and creating temporary supportive housing opportunities. Also, at base level, the Atlanta businesses depend on affordable housing where its labor pool can reside. We’re pushing that labor pool to the periphery of the Metro area and now, beyond. We will suffer economically in the medium to long term if we don’t address our housing issues.
Why aren’t more developers building affordable housing (both for sale and for rent)?
Eric Kronberg: Affordable housing requires federal subsidy to provide. That is exceedingly scarce. We simply don’t have the wealth as a nation to fund housing in the current paradigm in this fashion. When discussing workforce housing, it is much more achievable when little to no parking is provided, and the majority of the site is used to house humans instead of cars. So this is fundamentally a transportation question. We need a big push in investment of additional transportation measures, but we recommend lighter, faster, cheaper solutions to augment the More MARTA and other bigger lifts. More restriping of roads to provide better bike and pedestrian experiences, sidewalk repairs, better bus stops.
Joel Dixon: This is a complicated question because some of the short answers (greed and lack of interest) aren’t really the full story. Affordable for-sale is difficult from a funding and sales perspective due to the high land costs, costs of construction and typically lower unit density to cover costs. In addition, you still have to get people approved for mortgages and approval rates are more challenging the lower the affordability (or income-restricted incomes) that are desired. Affordable for-rent is largely just based on rising land costs, rising rent environment (opportunity costs) that disincentivizes building affordable housing in order to get market returns. In addition, it’s more difficult than market-rate and much more bureaucratic to accomplish. There are also now challenges with getting the types of traditional subsidies (i.e. tax credits) that helped fund the equity for these projects.
Justin Bleeker: Developers aren’t building affordable housing units because they’re not incentivized or required to do so. The cost of producing a unit of housing has skyrocketed in the past few years due to: 1) higher construction costs 2) higher land costs 3) higher labor costs 4) high time/monetary costs placed on development by the public sector.
What are some promising prospects to get this under control?
Eric Kronberg: We’ve got a handful of new progressive city council members ready to step up to the challenge, and a mayor that is working tirelessly out of the gates. The lift is huge, I don’t think they fully understand the immense scale of the problem, but they are leaning in hard on this issue.
Joel Dixon: We still have a significant amount of inefficiently utilized land that can be better planned and zoned to both allow for housing real people and preserve our tree canopy. That can actually allow for equity and inclusion while protecting our neighborhoods. The city and other missionally-aligned entities still own a lot of the land in our city that allows for lower acquisition/development costs. I’m an optimist but I also am working in the field so I see the tremendous amount of activity and committed nonprofit and for-profit developers working on this issue. We’re enabling funding mechanisms now that will allow for permanently affordable for-sale housing to be built alongside developers like us and Atlanta Land Trust. There are committed municipal funds that can now be allocated to affordable for-sale housing (besides just down payment assistance). There is an increased recognition that affordable and equitable housing requires diversity of housing types (across single family, missing middle housing like duplexes/quads, smaller multifamily, townhomes, larger multifamily and mixed-use). This will enable truly inclusive and equitable zoning adjustments. Finally, this year I’m excited to work on not just housing affordability but show how total household affordability is tied to transportation costs (the 2nd largest cost of household expenses after housing).
Justin Bleeker: The proposed zoning changes that create more density are key to addressing our housing crisis. We also need to streamline permitting, the tree ordinance, and site development requirements. The human and financial resources necessary to navigate city regulations creates a significantly higher cost to housing. I believe Mayor Dickens administration understands these issues and may make significant changes to address those issues. I also think the creation of the public/private/non-profit collaboration strategies via HouseATL and other individual organization relationships shows a commitment to addressing the issues. At the end of the day, creating significantly higher supply of housing units is really the only way out of this crisis.
What creative solutions are developers taking to increase the affordable housing supply?
Justin Bleeker: Currently, we’re working within the City’s zoning code to find ways to creatively use guest suites, guest houses, and ADUs to create additional affordable units.
Eric Kronberg: Our Finley Street Cottages is a pilot project that is saving two 100-year-old homes, adding a range of housing choices, providing half of the rental dwellings at 60%-80% of AMI, providing parking free housing options within walking distance of the Edgewood MARTA Station & Edgewood Retail District, providing robust covered, protected bike parking facilities with e-bike charging capacity as well, providing extensive stormwater management systems to limit runoff, and providing a cottage court to foster and promote community. And it’s doing all of this with no subsidy.
We are grateful to be able to share these insights with you and look forward to working with local partners to support more housing affordability. We’d love to also hear from our readers: use the comment section to let us know how you’ve been impacted by Atlanta’s rising housing costs. If you are interested in investing to support affordable housing in the region or are a developer in need of capital to create affordable housing, reach out to us at Reinvestment Fund for a conversation.