The Crux of Arlington’s Affordable Housing Crisis: $350,000 Per Unit

Amazon will donate $3 million to support affordable housing in Arlington County, the company has announced. While government officials and charities welcomed the donation, reports the Washington Post, critics contend that the sum is sufficient to build only a handful of units.

According to the Northern Virginia Affordable Housing Alliance, new housing in the Virginia suburbs costs about $350,000 per unit. In other words, Amazon’s gift is enough to build about 8.6 housing units. For purposes of comparison, the tech giant expects to employ 25,000 at its Arlington facility, and that doesn’t include jobs created by vendors, partners, spin-offs and support entities such as Virginia Tech’s new technology campus that locate near Amazon’s HQ2.

In other words, the donation is meaningless. The number we should focus on, however, is $350,000. If that’s what it costs to build “affordable” housing in Northern Virginia, then no wonder there is a housing panic.

The cost per square foot of manufactured housing in the United States, including delivery and installation, ranges from $100 to $200 per square foot. If we assume 1,000 square feet per affordable housing unit on average, then we’re talking in the range of $100,000 to $200,000 as a benchmark for building a housing unit. (Actually, housing built for lower-income households would require less customization, so a realistic figure would be on the low side of that range.)

The implication is that the cost of acquiring and developing the land for affordable housing is $200,000 to $250,000 per unit. That is the problem that no one seems to be addressing.

Arlington County is perhaps the most densely zoned locality in Virginia, but it’s not zoned densely enough. Arlington sits at the center of the Washington metropolitan area, one of the largest and wealthiest metros in the country. Land should be developed at high densities. The same can be said of neighboring Alexandria, Falls Church and eastern Fairfax County.

In a free market for housing, developers would acquire under-utilized land — old car dealerships, decaying strip malls, long-in-the-tooth residential subdivisions — and recycle it at much higher densities, spreading the land development costs over a greater number of units. Due to an array of zoning restrictions, however, that’s not possible.

Here’s a current map of Arlington’s zoning code. Land restricted to low-density single-family dwellings (one to ten units per acre) is marked in pale yellow — more than half the county. Excluding Reagan National Airport and Arlington Cemetery, two-thirds of developable land is restricted to low density. Again, “low density” is a relative term. Arlington’s low-density zoning is higher density than much of, say, Richmond or Norfolk. But in the context of its position at the center of a major metropolitan area, it is artificially low density.

(It’s not fair to place the entire onus on Arlington. The Washington metro housing market is regional in scope, not restricted to a single county. In any affordable-housing analysis, one also needs to consider the comprehensive plans for Alexandria, Falls Church and Fairfax County as well.)

The cost of land per unit of housing is expensive (1) because land use is highly restricted, and (2) local government imposes regulatory costs such as environmental fees, proffers, and utility hookup fees. If there is any hope to address the affordable housing crisis in Northern Virginia, Arlington and its neighbors need to reduce these restrictions, fees, and costs. Coughing up $35 million in taxpayer funds to address affordable housing — a significant sum even for Arlington — is a drop in the bucket, enough to build 100 new affordable dwellings. It is literally impossible to address the affordability issue without sweeping zoning changes.

How about transportation? The feedback I’ve gotten on this blog is that increasing the density of housing will overwhelm local transportation systems. Not necessarily.

The lower-income households who would avail themselves of new affordable housing units are significantly less likely to own automobiles and more likely than the general populace to use public transportation. As it happens, Arlington has a superlative system of local and regional public transportation. Indeed, an increase in population density along Metro rail and bus lines would generate larger ridership at little additional marginal cost, thus improving the economics of the region’s shaky mass transit system.

I’m not saying that greater density would have zero negative impact on Arlington’s streets and roads, but I am saying that the impact would be significantly mitigated by the county’s and region’s large investment in mass transit.

There are no easy, painless solutions in urban development, just complex trade-offs. But some trade-offs are better than others. Higher density for affordable housing in an area well served by mass transit is one of them.

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6 responses to “The Crux of Arlington’s Affordable Housing Crisis: $350,000 Per Unit”

  1. Steve Haner Avatar
    Steve Haner

    Don’t know much about this year, but last year when my daughter’s family sold one house and bought another here in the Richmond market, $350K didn’t get you much, especially in close-in neighborhoods where the schools were in demand. This “affordable housing” issue is not just NOVA. Starter homes in particular in very short supply.

    1. The affordable housing issue is heating up in Richmond, too… for the same reasons. The economy here isn’t as hot as in Northern Virginia, so the problem is not as acute. But the same laws of supply and demand apply.

  2. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    Close in affordable housing problems are everywhere in and around Washington DC and have been since 1980s. Save for the Ballston Rosslyn Corridor, the growing problem has long been strenuously denied by DC’s liberal elite in flavor of maintaining at all costs their privileged status quo. This is especially true in areas around urban universities. The problem of affordable housing for most all young people and many in middle class now is getting worse as costs accelerate yet again with the new Trump economy, and the continued expansion of the liberal administrative state the feeds ever more lawyers and other Fed. government Janissaries of all kinds, colors, and sorts, a tribe that expands and complicates daily.

    Thus, starter homes in NW Washington are approaching $1 Million. If the long past is prologue, these problems will grow, not diminish. Alexandria and Arlington / Falls Church are now downtown DC. These areas should be treated for what it are and must remain, densely urban, as Jim’s article wisely points out.

  3. There’s one factor missing: not everyone wants to live in a more densely developed area. So there are two issues: cost and quality of life.

    Rural residents know it as a fact of life that to have an affordable home, working age people usually have to out-commute to work. Taking the 6 counties of the Middle Peninsula together, based on the Census Bureau’s OnTheMap application, 81% are employed outside of the county they live in.

    King & Queen only has 8% and King William 12% employed in the same county. Gloucester, the largest, has 44%. The other three have about 20% each employed in the same county as they live.

    And at the same time, IMO, it’s a good bet a lot of those out-commuters prefer their rural lifestyle.

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      I believe you are right, Carol. Likely that is one reason that growth with be in the Shenandoah Valley’s future, but it must be done right, otherwise it will ruin the very lifestyle and quality that so many people today, and in the future will, seek and dearly miss.

  4. LarrytheG Avatar

    Talking about “manufacturing housing” costs in the context of dense urban is not really relevant. The more relevant number would be the cost per square foot for a multi-story building in an urban area.

    The second thing is that – apart from zoning “restrictions” – an acre of land in a urban area is worth a LOT of money whether it be NoVa or New York City or Richmond. And those that develop use the phrase “highest and best use” :
    ” The definition of highest and best use is as follows: The reasonable, probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value.”

    Now, ANY developer CAN PROPOSE a re-zoning and the locality in Virginia is FREE to entertain higher density – but when they do – they want to take into account the impacts that such density will have -no only transportation but things like schools, fire, rescue, libraries, parks, etc. You can’t just plop down an uber dense development without making sure that infrastructure and services are available to serve those who live there.

    This is not “restrictive” policies – it’s policies to assure that impacts to existing residents as well as the new ones are known and mitigated.

    When we say that the “problem” is “restrictive policies” and claim that if only more density was “allowed” , the market would meet the demand for “affordable housing”, I have the same question as always. Show me a list of urban areas that have actually “removed” restrictions (and name those restrictions) and as a result there is more/better affordable housing.

    Otherwise – it’s just an exercise in someone advocating a belief without any actual examples and the idea that such restrictions are in all urban areas – ergo no affordable housing, etc, etc…

    the driving factor is the “best and highest use” that the private sector market works for and that’s why upscale apartments get build instead of affordable housing. The market will extract the “highest and best use” no matter what govt does.

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