Many people are concerned about housing affordability, especially following the Great Recession of 2009. The total number of Iowa single-family properties in foreclosure status has fallen from a high of almost 5,000 during the fourth quarter 2012 to just over 3,000 in the fourth quarter 2014. The low, according to the University of Iowa Housing and Land Use Policy Program, was in mid-2006, when there were only 499 foreclosures statewide.
HUD has been working hard to address this issue for almost 80 years., first through the U.S. Housing Act of 1937, which established the Section 8 housing vouchers, and later through Community Development Block Grants and other programs. Even with all the tax money expended, there are still “affordable housing issues” for both renters and buyers.
A 2013 report by RDG Planning & Design and Gruen Gruen Associates on Iowa housing estimated that a new one-bedroom apartment of about 800 square feet would cost between $93,000 and $115,000 to build. The rent to make this profitable for an owner, at a 10 percent return, would be between $850 and $1,000 per month, plus utilities. These units all have excellent heating, good windows, central air-conditioning, a microwave and an automatic dishwasher. They are not substandard housing. Unfortunately, the rental rate deemed acceptable for the very lowest income renters by HUD is closer to $500-$600 per month. Therefore it is almost impossible to rent apartments to low-income people and still make a profit.
What about single-family housing? The story there is even more striking. In 1950, the average size of a single-family home was 983 square feet, and there were three people living in it. Today’s single-family home typically has 2.5 people living in 2,300 square feet. Each person, individually, now has over 900 square feet of living space, compared to less than 900 square feet total for all three people in 1950.
The price for this residence has risen exponentially as well. The cost for the average 1950s house in 2000 dollars was just under $61,000. Nationally, the average price for a single-family home built in 2013 was $324,500. In Iowa, according to the National Association of Realtors, the median sales price of a single-family home in Des Moines between January and March 2015 was significantly less than the national average, at only $171,500.
It might be that we are all just a little “House Rich,” and maybe one of the solutions to the affordable housing issue is for everyone to realize that you don’t need 2,300 square feet to live in. What you need is a safe and secure place for your family to eat, sleep and play.
What you do not want is to have your house foreclosed on. Before that happens, put it on the market and move to a less expensive place. Rent a one-bedroom apartment if you have to. You will still be living in as much space as people did in 1950. Then maybe our housing affordability crisis could be solved, without government intervention—but instead with Iowa common sense.