Cohousing-L Mailing List: Lot Development Model

[Mac Thomson (mac]

Martin Tracy's response to Pablo's posting got me thinking.  I also don't
quite understand the conclusions that Pablo's drawn.  Here's his original
posting:

>The "lot" model of building cohousing only works if lots are cheap enough 
>for the people building the cheapest house. This may sound like a 
>requirement for *any* cohousing, but it is not. New View's land is much too 
>expensive for the people building the cheapest houses. We rely on the 
>developer's ability (we are the developer, in this case) to sell larger, 
>more expensive units at a smaller land cost/final cost ratio than the 
>smaller, less expensive units. If we sold land to the members as lots, the 
>people building larger units would get a bargain while the people building 
>smaller units would get shafted.

>Real-life example (numbers are very rough, just to make the point):

>Our common costs and land work out to about $100,000 per house. If we sold 
>plots at $100,000 apiece, then someone building a a $80,000 2-bedroom 
>structure would pay $180,000 total for their house and land. This is 
>reasonable or a bit high. However, someone building a house 50% bigger that 
>costs $120,000 to build would pay $220,000 for their house - quite a bargain

>for such a large house. Someone else building a small $60,000 1-2 bedroom 
>house would pay $160,000 for their house - way above market rate for such a 
>small house.

Pablo, you state that in the case of selling completed houses rather than
lots, "We rely on the developer's ability (we are the developer, in this
case) to sell larger, more expensive units at a smaller land cost/final cost
ratio than the smaller, less expensive units."  But this land cost/final cost
ratio is *always* going to be smaller for more expensive houses given that
the land costs are the same.  This holds true for houses built individually
upon purchased lots as well as purchased completed houses.  To illustrate,
using your example:

    Land (& Common Fac)     House     Total     Land/ Total Cost Ratio
          $100K                      $120       $220                  45%
          $100K                        $80       $180                  56%
          $100K                        $60       $160                  63%

I'm not sure if I'm missing the point here, but it doesn't seem to me that
developer built houses are going to somehow make smaller houses more
affordable.  Maybe you are asserting that the developer would subsidize the
lots and share of common facilities of smaller units (charge them say $80K)
by charging the larger units more (say $120K).  To me, this doesn't seem
fair.  Why should 2 families pay different amounts to receive the same thing?


It seems to me that a person buying into cohousing is buying a package of 3
assets:  1) a lot; 2) a house; and 3) a share of the common facilities. 
Assuming that everyone gets an equivalent lot and share of common facilities,
why is it a problem that a person building a large house pays $120K for that
house ($220 total) and someone building a small house pays $60K for that
house ($160 total)?  These 2 people are getting the same lot and common
facilities and paying the same amount for them, and they are getting
different houses and paying different, yet proportional, amounts for them. 
How is it that "the people building smaller units would get shafted"?

Do you feel that they're "getting shafted" because the $160K smaller house is
"way above market rate for such a small house"?  That could be because the
market doesn't demand a small house on such expensive land.  To the market,
cheap house and expensive land may be a bit of an incongruous package. 
Subsidizing may be the only way to bring the cheap house in line with market
rate, but this strategy should be openly recognized and accepted by the whole
group, especially those in the large houses who are going to be paying the
premiums to subsidize those in the small houses.

*   Mac Thomson                         San Juan Cohousing
*   Mac [at] HappyValley.com           Durango, Colorado
*
*   "Life is not a problem to be solved,
*     but a mystery to be lived."

--Sent from HappyValley FirstClass BBS 904.246.9255