Cohousing-L Mailing List: Re: A cohousing consultant and workshop

[Pablo Halpern (phalpern]

Elise Mattheson writes:
> As always, there are different levels of commitment to *being* financially
> able to do it, but I've gotten turned off by a certain "smoothie" sort
> of approach.  Looks alarming, sometimes.  I'm all for clumping together
> with folks who want to move forward, but I don't think that "why should
> affordability be important?" bodes well for the other issues.  I mean,
> will the word "accessibility" be substituted next?  Is my friend who
> cannot climb those stairs expendable?  
[...]
> End rant, and I hope I haven't grossly insulted anybody.  I know that
> we've all got different priorities.  It's just that this darned
> stubborn Danish-American believes that there's something in
> Scandinavian cohousing that we would do well to take a hard look
> at; I fear it makes us look, rather deservedly, at the weird ways
> Americans act around class and money issues, and wince.

Eric Rehm writes:
> It's simple...take the profit out of owning a house.  By limiting equity,
> you don't remove the incentive to improve the house - you'll get a fair
> return on your improvements, and you can the value of your investment
> with respect to inflation.  You just won't be able to mark up your housing.

Okay, here's my take on all of this affordability stuff.

First, nobody said "why should affordability be important?"  Every group 
I've had contact with felt that affordability is important.  The issue
comes down to "can we afford to have affordable housing?"  Of all of the
social goals I've seen cohousing groups struggle with, this has been one
of the most difficult to achieve.

As others have mentioned, there is no magic to cohousing as far as cost
is concerned.  Any developer will have the same economies of scale
building a standard condo or townhouse developement, maybe even more
(because of less diversity of housing).  The only potential savings is
developer's profit, but this is easily eaten up by the common house as
well as development consultants.  The inefficiencies of the group
process can also cost money.  The net result is that most cohosuing is
at or close to the market rate for comparable houses in the same
geographical area.

Now, the only hope of producing housing at substantially below market
rate is if someone (government or otherwise) donates land and/or money
to the project.  Kate McCamant told our group that the average
affordable housing project has nine sources of funding.  Getting funding
alone could delay the project from 2 to 10 years!  Understandably, few
groups have been willing to take this on in addition to everything else
demanded of them.

As far as limitted equity goes.  It, too, is of little practical value
without outside grants.  As I already mentioned, the cost of housing for
the original residents is likely to be very close the the general market
in the area.  If residents are forced to sell at below market rate, then
affordability is gained at the expense of the founders.  Everybody
except the founders gets affordable houses and the founders have to foot
the bill.  After 3-5 years of toil, I don't want to be financially
penalized, as well!

Does this mean that it's okay for people to realize obscene profits from
their cohousing units?  No, but I don't really see that happening.  I
don't know what the house in Windlow cost originally, so I don't know if
an obscene profit is being made.  Limitted equity based on housing
market averages might be reasonable scheme, but in most cases, I don't
think it will make much difference.

At the risk of wearing out a phrase, "when cohousing becomes more
accepted," government agencies and others may be willing to contribute
to the construction of affordable cohousing communities.

-- 
Pablo

------------------------------------------------------------------------
Pablo Halpern                          phalpern [at] world.std.com
(508) 435-5274
------------------------------------------------------------------------