Housing – It’s common to hear people comment on the state of housing in Cody. And it’s a topic we should be talking about – because it is critcial to our success as a community.
All that we do in economic development is predicated on the availability of workforce and that workforce is available based on the availability of housing. In the Building Blocks model, it should be easy to see why this community component is at the base level – it’s important!
That people are talking about housing is a good start, but the conversation needs to shift. What I hear now are people discussing the high cost, affordability or the lack of inventory. And while those may be true statements, they don’t go very far toward addressing the need. So, let’s begin a conversation on how we can do something about it. I think that conversation begins with a core understanding of two key factors – affordability and availability.
Lenders, private and public consider “affordable housing” as a home which can be obtained at a cost of 28 -30% of gross income. This cost includes principle, interest, taxes and insurance. So with a median household income of $64,876 in Cody (2018 Census Data), a household should be able to purchase a home in the $250,000 – $300,000 range – right? In an ideal world – perhaps, but we’re a long ways from there.
What’s not entered into that equation are matters of down payment, credit and other debt. Purchasing a home is an important life decision and bears some thought. It’s basically getting your house in order. Each of these financial constraints require a serious analysis of your life situation and perhaps a shifting of behavior to overcome the obstacle. There are several personal finance programs which guide individuals who wish to acheive homeownership. The following page of this article provides some guidance to this effect.
Availability on the other hand is a topic we need to discuss. A check of the Multiple List Service of the Park County Board of Realtors shows that there are 15 listings for homes in the City of Cody in the under $300,000 price range. Query deeper and you’ll see ONLY 3 listings under $200,000. From that snapshot, one would assume that there is a serious shortfall of lower cost housing. And you’d be right! A Park County Housing Study completed in 2010 told the same story.
So how does a community increase the inventory in the lower cost housing market? It will take some leverage, leverage provided by some type of public investment. While I have always been a proponent of housing as a private sector response to market demand, our housing situation is different. While the reasons vary, the development community doesn’t have a lot of incentive to address needs in the lower cost housing market. If a high demand actually dictated an increase in supply, we’d see an avalanche of developers building houses in the $150,000 – $250,000 range. But we don’t – why is that?
Housing development carries two major costs – land and construction. Most people do not build on bare land – they need infrastructure and of course, that drives up costs. In Cody, a simple lot with power, water, sewer and communication at the curb will cost $60,000 – $90,000. Over time, the cost of materials and labor have driven residential building costs upward into the $170 – $200 per square foot range. Using the low-end numbers, building a 1,200 square foot home would cost $264,000. Therein lies the challenge and the jumping off point for a community discussion. Just how can we (we meaning the public) take steps to facilitate more lower cost development?
There are obviously two answers – reduce the land cost or reduce the construction cost.
Communities across the country have employed a number of tools to develop residential lots at a low cost to the home owner. These tools include grants or long-term, low-interest loans to acquire and improve infrastructure for the development. Lot costs can be reduced significantly and as a result increase affordability. Projects are developed based on the income levels of potential homeowners. Provisions can (and should) be enacted to insure that home owners are given the opportunity to achieve homeownership, but not as a cash windfall upon sale.
Construction cost is more difficult to manage as costs are costs. Building supply companies or contractors can’t simply drop their cost as an act of charity. Their costs are driven by external forces. But there are ways that development can occur utilizing common materials, similar building plans, and different approaches to labor. Several models to this effect have been employed in other areas.
These topics need a deeper analysis and a driving entity. As you may realize, there is not a “responsible” party for housing in our community or the region. And you may also realize that this type of housing development is not a part time nor a volunteer effort. It will take resources and commitment from a broad cross section of the community. As for Forward Cody, while our charge is quality job creation and business development, we do recognize we have a dog in the fight as well.
We recognize the need and have some insight as to solutions, but as should be apparent, many more voices are needed. This article serves as a call to action to those interested in engaging in the process, not simply commenting on it. If you feel a passion to fix this issue, contact our office at 587-3136.