Housing Doesn’t
Just Mean Houses
By Charlie Smith
Southern Indiana was once a place of small
farms and back county roads. While you can
still find those things, we are not a rural as we
used to be. Our region is now a place of new
business investment, job growth, and change.
Every community experiences growth pains at
some point but the strength of a community
can be determined by how they work together
to succeed.
If you live or work in Southern Indiana, you have
probably noticed an increase over the last several
years of new homes being built. Maybe you have
a whole new neighborhood being developed near
you. Those homes are great for the person or family
who is moving into their second home, but what
about the downsizers? What about the upcoming
professionals who need a home but are not ready
to take on the burden of a mortgage? They want
somewhere clean, safe, and nice but allows them
to focus on their future. Where will they go? How
can help them become our neighbors?
As our area continues to experience economic
success and job creation , it is important we all
work to understand what the housing needs are
to accommodate our growing communities. As
a community, we also must understand that
housing does not mean “just houses”.
For the sake of clarity, just because a developer
would like to invest in a multifamily project near
you doesn’t mean it is a bad idea. In the industry,
multifamily includes anything that is not a single
house while keeping in mind that multifamily
housing doesn’t just mean rental either. It could
mean patio homes, duplexes, as well as mixed-
used projects that blend retail and residential.
There are some misconceptions revolving
around multifamily developments.
One of the most popular is it will lower your
property values. That is a fallacy that has been
well studied by universities such as Harvard and
Columbia. Studies actually found that an area
with a mix of housing options enjoy an increase in
property values. Those same areas are also more
likely to attract small niche businesses and become
more attractive to future residents. In addition,
by supporting the multifamily development near
you, it will actually help lower your taxes. Those
multifamily units pay taxes based on a higher
assessed value and as well as a tax rate than
single family properties. Because the local unit
of government is seeing these added benefits of
additional tax revenue, it lessens the tax burden
for every resident because the financial needs of
government are being spread over a larger tax base.
What actually does lower your property values?
If neighbors and local government oppose
projects that provide multifamily housing options
(including rental units) it is actually increasing
the demand for it. The only way to fill the demand
for rental housing is for more single family homes
in your neighborhood to be purchased as an
investment for use as a rental home. A few here
and there are not bad but a large concentration of
rental single family homes does have a negative
impact on surrounding property values. This is
confirmed by the American Community Survey
conducted by the US Census Bureau.
It is easy to forget that building and development
companies are businesses like any other.
In order to be successful, the business has
to take a risk by investing in their craft with the
hopes of positive return on investment. They are
no different than the owner of the local coffee
shop, pub, or salon.
One of the key factors in determining if a project
is worth the risk is density. In relation to density and
multifamily housing, higher density allows more
investment into the project which then justifies
higher rents. This is because more investments
in amenities within the project such as a pool,
workout room, business office, free wi-fi, garages,
playgrounds, clubhouse, etc., higher rents are now
justified to new residents. We also have to keep in
mind that all of these additional amenities take
away from the available land within the project
which increases the need for more density as well.
This is why allowing increased density actually
improves the quality of multifamily projects and
not the other way around.
On social media, I have seen countless comments
about why certain areas of the community don’t
see anything but fast food and convenience
businesses. That is a simple answer: There is not
enough density or disposable income to support
anything but those at this time.
Let’s use the Hwy 62 corridor by River Ridge
as an example. The people coming and going to
those jobs are not bringing their families to work
with them to stop somewhere nice for dinner or
shopping on the way home. What would help
spur commercial retail developments that host
those types of businesses are increased density
of housing options. People like to spend their
money where they can relax and enjoy a nice
dinner, shopping, or an evening out. Having
enough people living in the area to support those
businesses helps attract more of those businesses
to the area.
If you look at some of the areas of Louisville
where you go for entertainment and shopping,
there is a mix of housing options. This pattern is
repeated over and over again in every area of the
country including Indianapolis, Carmel, Nashville,
and Denver. We can learn from their successes
to help guide what Southern Indiana will be for
our children and grandchildren.
I support our community allowing investment
for growth, but I also believe it has to be smart
planned growth based in objective fact and not
subjective opinion. Just because it can be built,
should it be built? We must learn to answer that
question honestly and based on the needs of
our community. The honest answer sometimes
may not be popular. However, as a resident in a
growing community, I know we will learn to keep
moving forward.
Charlie Smith is with the Building & Development
Association of Southern Indiana, which is the local
affiliate of the Indiana Builders Association and
National Association of Home Builders. Charlie
is a lifelong Jeffersonville resident and married
father of one. Want to respond to Charlie? Send
an email to extol@extolmag.com.
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