A City, If You Can Keep It: Affordable Housing — Outside the Box

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A Winters Express opinion column

By Richard Casavecchia
Special to the Express

The persistent problem with housing in Winters and California is the lack of affordable housing.

The main stumbling block is that homes below market rates aren’t financially viable. The economics don’t pencil out. Typically, the discussion for how we build affordable housing centers around subsidizing the cost to build the homes by seeking out grants or seeking something called “in-lieu fees” collected by the city from other development projects that do not have affordable housing components.

But what if we think about the problem differently? What if we don’t ask “how do we subsidize the cost?” but rather “how do we change the economics?” How do we lower the cost to build? This sounds impossible in the current economy of supply shortages and inflationary cost increases.

It’s important to note that affordable housing does not mean the house is affordable in the way we commonly define the word. It has a legal definition of payments not more than 30 percent of gross household income (Health and Safety Code Section 50052.5). This applies to five income brackets based on the Area Median Income (AMI):

  • Acutely low: 0–15 percent of AMI
  • Extremely low: 15–30 percent of AMI
  • Very low: 30–50 percent of AMI
  • Lower: 50–80 percent of AMI (may also be used to mean 0–80 percent of AMI)
  • Moderate: 80–120 percent of AMI

For Yolo County, the AMI is $102,400 of pretax income. Income limits are variable based on the size of the household, but already a problem develops. For reference, almost every teacher in Winters Joint Unified School District qualifies as Low Income based on the published 21–22 salary schedule. The exception are certificated teachers with a Master’s Degree plus 30 additional credit hours and over 20 years in the district.

Using a present value calculation to estimate home value from the payment amount, I’ve put a chart together that shows the high and low sales price that qualifies for each income bracket given a credit score of 690–719 and an interest rate of 5.122 percent (rate and scores sourced online). These are estimates to get perspective and further the conversation and shouldn’t be read as exact amounts one will get when buying a home. Please see any of the talented Real Estate agents in town for specifics, if you are in the market. There is also property tax and insurance to factor in, but this analysis will get us in the ballpark.

Figure 1 (Courtesy graphic)

As you can see in Figure 1, the problem is that livable homes just don’t exist at prices that meet the requirements for households making $80,000 and less. No one is going to build a home and sell it for a loss. There is a minimum profit that builders need to make for the construction to be worth their time.

With rising material costs and expenses related to running a business in California, how do we make it cheaper to construct a home?

One option is additive manufacturing also known as 3D printing. No, not a house made of plastic using a desktop 3D printer you can buy from Best Buy. Additive manufacturing can be done with concrete, so a house can be printed in place.

In March of last year, CNN published a story that the first 3D printed housing community in the US is being built in Rancho Mirage, near Palm Springs. These homes are priced 30 percent cheaper than the average home in the same town.

After some further reading on the technology, I discovered the first 3D printed office in Europe took 22 days on the first test attempt and three days on the second try.

The building company in Rancho Mirage, named Modly, says they are embracing additive manufacturing because it is less wasteful than traditional wood frame construction. It seems positioned as a luxury modular home builder with construction occurring offsite, more than a 3D printed home company, but they’re only the first in California. If it, or another company like it, could replicate that price savings elsewhere, they might be a viable solution for affordable housing in Winters.

Another company named SQ4D built and sold the first 3D-printed home in the United States in Riverhead, New York. The home is three bedrooms, two baths, 1,407 square feet, took 48 hours to build and cost $20,000. The home was priced 50 percent cheaper than comparable new homes in the area. SQ4D claims they have “building plans being reviewed from New York to California.” SQ4D uses a print-in-place process rather than Modly’s offsite manufacturing.

SQ4D brags that they have completed the “world’s largest permitted 3D printed home as of January 2020” at 1,900 square feet. It took 48 hours and cost $6,000 in materials. A video of this project is posted on YouTube.

The technology exists to reduce construction time, cost, and waste to build homes. Winters could be one of the first communities in the state and possibly the country to use 3D printing to help alleviate the drought of affordable homes. Now we just need a property owner and developer willing to make it happen.

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