Fantastic article. Much of writing on housing affordability focuses on zoning and costs in the abstract, and you get a different picture when taking a closer look at the actual data. Patrick McAnaney wrote a similar breakdown for GGWash which focuses more on different financing sources (equity vs debt): https://ggwash.org/view/92306/why-affordable-housing-cant-pay-for-itself
I have a few questions I’d be interested to know your thoughts on:
1. I’m not sure which category(s) of costs zoning battles it would fall into here, but based on the breakdown I’m having trouble seeing where you would get cost savings from loosening zoning restriction/building by right. Not sure if that’s just because of the type of projects you work on?
2. There are a number of substantial line items (developer/contractor profit, loan interest, fees) which seem necessary for a well functioning private market, but could those be eliminated or reduced in the case of public housing? I also find it interesting the back and forth flow of money between developers and government in the form of fees and subsidies.
3. I’m curious how much you would say the size of these projects adds vs reduces costs. It seems like complexity plays a big part in driving up especially the soft costs, and on a per unit basis I’m wondering how the cost compares to a much smaller scale project like an ADU.
Thanks so much for the kind words. In response to your questions:
1) By-right zoning saves cost in a few areas: less legal costs, less architecture costs from multiple redesigns, less developer staff time, less predevelopment loan interest (if you're financing predevelopment costs)
2) No, all of those fees are typical in both market-rate and affordable housing development
3) That's a somewhat complicated question that depends on the site. For affordable housing (LIHTC) development, big apartment buildings like the ones discussed in this post are the norm. There are a number of fixed costs and admin staff time that have to go into developing through the LIHTC program, and so it's not worth it unless you have a big enough building to justify the hassle. Big apartment buildings are almost always the highest and best where we develop and is our product type. Plus there are economies of scale. But generally speaking smaller-sized projects, such as ADUs on small lots, are more cost efficient on a per-unit basis. Legalizing more small-scale infill development has, I think, more potential in transforming affordability at scale. See the results from Portland, for example: https://www.portland.gov/bps/planning/rip2/news/2025/2/4/portland-sees-significant-production-middle-housing-resulting
This is really helpful to know! Policies like the Maryland's Housing for Jobs bill would help reduce that uncertainty from the discretionary review process: https://mgaleg.maryland.gov/mgawebsite/Legislation/Details/sb0430?ys=2025RS
Good news!
Fantastic article. Much of writing on housing affordability focuses on zoning and costs in the abstract, and you get a different picture when taking a closer look at the actual data. Patrick McAnaney wrote a similar breakdown for GGWash which focuses more on different financing sources (equity vs debt): https://ggwash.org/view/92306/why-affordable-housing-cant-pay-for-itself
I have a few questions I’d be interested to know your thoughts on:
1. I’m not sure which category(s) of costs zoning battles it would fall into here, but based on the breakdown I’m having trouble seeing where you would get cost savings from loosening zoning restriction/building by right. Not sure if that’s just because of the type of projects you work on?
2. There are a number of substantial line items (developer/contractor profit, loan interest, fees) which seem necessary for a well functioning private market, but could those be eliminated or reduced in the case of public housing? I also find it interesting the back and forth flow of money between developers and government in the form of fees and subsidies.
3. I’m curious how much you would say the size of these projects adds vs reduces costs. It seems like complexity plays a big part in driving up especially the soft costs, and on a per unit basis I’m wondering how the cost compares to a much smaller scale project like an ADU.
Thanks so much for the kind words. In response to your questions:
1) By-right zoning saves cost in a few areas: less legal costs, less architecture costs from multiple redesigns, less developer staff time, less predevelopment loan interest (if you're financing predevelopment costs)
2) No, all of those fees are typical in both market-rate and affordable housing development
3) That's a somewhat complicated question that depends on the site. For affordable housing (LIHTC) development, big apartment buildings like the ones discussed in this post are the norm. There are a number of fixed costs and admin staff time that have to go into developing through the LIHTC program, and so it's not worth it unless you have a big enough building to justify the hassle. Big apartment buildings are almost always the highest and best where we develop and is our product type. Plus there are economies of scale. But generally speaking smaller-sized projects, such as ADUs on small lots, are more cost efficient on a per-unit basis. Legalizing more small-scale infill development has, I think, more potential in transforming affordability at scale. See the results from Portland, for example: https://www.portland.gov/bps/planning/rip2/news/2025/2/4/portland-sees-significant-production-middle-housing-resulting