SIGN OF THE TIMES: Members of Keep Metacomet Green! attempt to drum up support recently outside the entrance to the Metacomet Golf Club, the site of a proposed residential and commercial development. / PBN PHOTO/MICHAEL SALERNO
Nearly 20 years after East Providence started to reclaim 300 acres of its defunct industrial waterfront, new construction is changing the city’s landscape. Although the progress has come in fits and starts, the momentum has been enough to help push the city’s financial picture into positive territory and bring forward a new vision about what…
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While I might sympathize overall with Candace Seel’s views on affordable housing, I must criticize her lack of “street smarts” on the intricacies of construction costs and profit.
Let me use an example the experiences of a friend in his search for a new condo. He told me he avoided any development having affordable housing in it because there was no way a developer to reduce construction costs in one unit versus another. Sure they can use lower cost materials in the kitchen and bathrooms, but that’s the extent of it. After factoring in total construction cost and profit, the reward from risking your capital, in pricing of the condos, you can only get to the correct return by increasing the price of the condos to offset the “affordable” units. In other words all purchasers of the other units subsidize the affordable units. The more luxurious the project, the greater the disconnect and the greater the subsidy.
It’s unrealistic to assume you would ever get a affordable $200,000 condo amidst $700,000 units on any waterfront anywhere. You can’t find cheap low cost houses at Malibu Beach why would you think that is possible at Kettle Point. No, the route to affordable housing is to erect buildings totally devoted to that kind of housing (maybe with government subsidies) and/or push initiatives to significantly increase the overall housing stock of the community and let the natural domino effect of that improve the availability of affordable units.
Want to share this story? Click Here to purchase a link that allows anyone to read it on any device whether or not they are a subscriber.
While I might sympathize overall with Candace Seel’s views on affordable housing, I must criticize her lack of “street smarts” on the intricacies of construction costs and profit.
Let me use an example the experiences of a friend in his search for a new condo. He told me he avoided any development having affordable housing in it because there was no way a developer to reduce construction costs in one unit versus another. Sure they can use lower cost materials in the kitchen and bathrooms, but that’s the extent of it. After factoring in total construction cost and profit, the reward from risking your capital, in pricing of the condos, you can only get to the correct return by increasing the price of the condos to offset the “affordable” units. In other words all purchasers of the other units subsidize the affordable units. The more luxurious the project, the greater the disconnect and the greater the subsidy.
It’s unrealistic to assume you would ever get a affordable $200,000 condo amidst $700,000 units on any waterfront anywhere. You can’t find cheap low cost houses at Malibu Beach why would you think that is possible at Kettle Point. No, the route to affordable housing is to erect buildings totally devoted to that kind of housing (maybe with government subsidies) and/or push initiatives to significantly increase the overall housing stock of the community and let the natural domino effect of that improve the availability of affordable units.