Of Density and Data, or, What About My Property Values?
Over coffee recently, I was talking with a friend about the fast-rising price of housing. She sympathized with my concern but pointed out, “People want a buying frenzy when they put their house on the market.”
That remark took me aback, but only for a moment. It’s natural, after all. For most homeowners, our home is not just where we live; it’s also by far our biggest financial asset. It’s our nest egg as well as our nest. In a world full of uncertainty, the value of our home is our safety net.
Fifty-six percent of prospective buyers in our area say they have considered getting a second job so they can afford the price of a home, according to an April 28 Philadelphia Inquirer article. When those of us who already own homes read statistics like this, we may feel a messy mixture of feelings. Shock, perhaps. Dismay for those unable to find a foothold in the housing market. And possibly, anticipating the appreciation of our asset, some relief (or even glee).
For better or for worse, there’s not much a town like Swarthmore can do to stop the price of houses from going up even if its council and residents want to—or to prevent homes from selling on the first day they’re listed to buyers offering cash, which has become more or less the norm. The reasons for the state of the housing market are the subject for a different blog post, but I’ll just note here that they range from a demographic surge in the number of Americans reaching the typical home-buying age to low interest rates to pandemic supply chain problems. (Rising interest rates may be cooling the market slightly right now, but that’s not going to make the problem go away.)
When I talk about wanting Swarthmore to be more affordable, I’m not talking about limiting the amount of money people can sell their houses for.
What am I talking about then?
Not Being Forced Out
I worry about my neighbors who’ve lived in town for decades but won’t be able to afford to stay in their homes once they stop working. Many of these people have paid off their mortgages, but they still face large property tax bills and the prospect of needing a new roof or cleaning up a flooded basement.
These residents would almost certainly realize a tidy profit were they to sell their home, but they don’t want to sell. They want to stay where they know their neighbors and perhaps raised their children. They don’t want to leave the community they love.
Back in 2015, Swarthmore’s Aging-in-Place Task Force looked at this issue and made some thoughtful recommendations. Among these is permitting accessory dwelling units (ADUs—otherwise known as in-law suites, garage apartments, etc.) to provide a rental income stream to help retired people afford the continued costs of home ownership. The report points out that regional planning agencies like the Delaware Valley Regional Planning Commission also promote ADUs as important municipal tool to support housing for seniors and others of modest means.
Everyone should read the Aging-in-Place report! It’s an extremely thoughtful and well-written document, and pretty much everything it says is still relevant today.
Points of Entry
Lately I’ve been thinking about the affordability problem as a problem of points of entry. Certain categories of people (wealthy ones) can afford the price of entry into Swarthmore, but where are the access points for anyone else?
ADUs can help address this problem too. We can see this when we look at examples of how legal ADUs, built before our zoning code was enacted in the 1970s and therefore grandfathered in, are functioning.
A backyard ADU in Tacoma, Washington, courtesy of the Sightline Institute’s Modest Middle Homes Library
A divorced friend of mine was able to afford her house in Swarthmore because it came with an upstairs apartment she could rent out. Her tenant was a Swarthmore-Rutledge School teacher who wanted to send her kids to the school where she taught.
Because my friend’s house had a legal ADU, both she and her school-teacher tenant—two single parents—were able to be part of this community.
Another approach would be to divide some of our town’s large homes into multifamily condominiums. This too was recommended in the Aging-in-Place report. (The current zoning code permits the conversion of a single-family dwelling to two-family dwelling, but only through a public hearing process and approval by the town, and conversions to triplexes or quadplexes are not allowed.)
I recently stopped my car to look at an elegant three-story stone house in north Swarthmore that I knew to be a three-unit condominium, though from the outside you’d take it for a single-family home. We have about 50 buildings with between two and ten housing units in them in town that have, like the ADUs, been grandfathered in, but most big-house multi-units in Swarthmore are apartments rather than condominiums. I’m all for rentals, but I’m also interested in seeing people gain a foothold in the housing market, and condos are a great way to do that.
With large homes in town now routinely selling for over a million dollars, dividing them into two- or three-bedroom flats that might cost what I paid for my house in 2000 ($309,000) seems like a strategy worth pursuing.
Proposals like ADUs and large-house conversions are often referred to as “gentle density.” I could imagine using such strategies to add perhaps 10% more housing units to our town’s current 2,200.
But What Would That Do to Property Values?
I’ve heard a lot of concern that adding housing will change the nature of our community and lower property values. To this I’d say, first, gentle density is not about adding large apartment or condominium complexes. As a piece from last summer in New Jersey’s Friendly Planning Newsletter points out, density can be added subtly with “policies that acknowledge the historic scale of a place and build density incrementally, by leveraging historic housing typologies.”
In other words, we can go slow and make use of the housing stock we already have.
Studies of this issue are relatively new, but data is coming out. It shows that gentle density does not depress housing values but in fact increases them.
Think about a homeowner who converts their garage into an ADU and rents it out. What will happen to the value of that property? I think you can see that it’s going to going up. A recent paper by Sarah Thomaz at the University of California, Irvine, shows that ADUs typically increase property values by 40-60%.
I’m definitely interested in going slow. I’m also advocating here for the gentlest variety of gentle density.
Still, it’s worth pointing out that even new large housing complexes with subsidized rents, built for low-income people, generally raise the value of neighboring properties. As an author of a 2022 study by the Urban Institute told the Washington Post:
There is already so much evidence for the benefits of affordable housing—we know it reduces homelessness, lifts people out of poverty, improves health outcomes, helps kids succeed and stay in school…So the fact that we don’t see any negative effect [on home prices] is really huge. Not only that, but we’re seeing a consistent positive impact.
Change Is Coming
There are good reasons to approach any changes to Swarthmore’s zoning code with caution. As a community, we need to talk about what we want our town to look like in coming years and try to come to consensus about the best way to achieve those goals. We need to look at what other communities are doing, dig into whatever data we can find, and think hard about potential unintended consequences.
But we shouldn’t talk so long that we neglect to take action.
As one former borough council president reminded me recently, change is inevitable. Our task is to shape that change as well as we can for the good of the community.
