The American dream has long been anchored in homeownership, with a large single-family home standing as the ideal. As a result, in towns across America, this narrow perfect standard has led to an increasingly flat housing landscape.

Fueled by the housing boom that encouraged larger homes, and NIMBY (an acronym for "not in my backyard") ordinances that prohibit smaller or multifamily homes, many areas have seen their stock of rental and affordable homes decline. And where homes in an area cater to only one kind of resident, the lack of housing diversity has led to a lack of resident diversity.

Salisbury, Conn., a small town boasting lakes, hills and a two-hour drive to Manhattan, has become a popular location for retirees and vacation homes. That popularity fueled a 104 percent increase in the median price of a home in Salisbury between 1994 and 2009, to $397,500.

Editor’s note: This article is republished with permission of Builder magazine. View the original article: "The cost of NIMBYism."

By CLAIRE EASLEY

The American dream has long been anchored in homeownership, with a large single-family home standing as the ideal. As a result, in towns across America, this narrow perfect standard has led to an increasingly flat housing landscape.

Fueled by the housing boom that encouraged larger homes, and NIMBY (an acronym for "not in my backyard") ordinances that prohibit smaller or multifamily homes, many areas have seen their stock of rental and affordable homes decline. And where homes in an area cater to only one kind of resident, the lack of housing diversity has led to a lack of resident diversity.

Salisbury, Conn., a small town boasting lakes, hills and a two-hour drive to Manhattan, has become a popular location for retirees and vacation homes. That popularity fueled a 104 percent increase in the median price of a home in Salisbury between 1994 and 2009, to $397,500.

In a town of 2,410 housing units, only 27– or 1.12 percent — are considered affordable by the state’s 2008 Affordable Housing Appeals List.

A recent report by the town’s Affordable Housing Advisory Committee found that Salisbury’s residents had the highest median age of any town in the state. Due to an exodus of younger families being priced out of the market, enrollments at the Salisbury Central School fell 27 percent from 2000 to 2010. Salisbury, the report concluded, is in danger of becoming "an upscale retirement community."

Winnetka, Ill., a wealthy suburb of Chicago, faces the opposite problem. With a median home price of $1.1 million as of the third quarter of last year, Winnetka has become a destination for families at the peak of their earning years who want to get their children into the village’s top-notch schools, according to a report by the Winnetka Plan Commission.

Like the rest of the country, Winnetka has been losing its rental stock. Between 1980 and 2000, the report states that the village lost 262 rental units, a 38 percent reduction.

Smaller single-family homes have also been declining. Between 1990 and 2000, 51 percent of homes priced at less than $500,000 were lost from the market, leaving only 975 homes priced under the half-million-dollar mark, according to the report. 

However, due to the run-up in home prices, the commission concluded, "Winnetka is becoming less diverse in terms of age and income, and is becoming more transient."

The number of Winnetka’s school-aged children increased 26 percent between 1990 and 2000. The community’s "high mobility rates suggest that ‘school stretch’ is occurring — that is, families are stretching their housing budget to get their children into the public schools, but are then leaving the village once their children leave home," the report found.

Economic implications

Beyond the decline in resident diversity, the increasing homogeny of these areas also has economic consequences.

Interviews with Salisbury’s seven largest employers revealed that these companies are concerned about the aging labor pool and worried about where future employees will come from, the housing committee found. More than 40 percent of employees at the community’s retirement home, Salisbury Bank and Trust, Salisbury Central School, and a local private school are 50 or older.

Meanwhile, a new teacher starting at Salisbury Central School in 2009 with a bachelor’s degree would have received a salary of $37,780. Not a single home was available in Salisbury that year that would be affordable at such an income.

The fact that the town is aging so dramatically is also jeopardizing the town’s community-supported ambulance and firefighting services. Recent projections say the town’s "working population" ages 20-64 will decline from 2,162 in 2000 to 1,799 in 2030. Meanwhile, the town’s 65-and-older population is expected to grow from 751 to 1,829 by 2030.

Rick Roger, chief of the Lakeville Hose Co. — the town’s volunteer firefighting unit — told the town’s Affordable Housing Advisory Committee that volunteers in their late 20s and early 30s are being forced to move away due to lack of affordable housing options.

"If affordable housing were available, they’d like to stay here. Most of them grew up here," he said.

If Salisbury is forced to turn these services over to paid firefighters and ambulance workers, the report estimates the cost for the town would be about $4.5 million per year — almost the cost of Salisbury’s entire budget for 2010 after elementary school and high school expenses. Such an increase would raise each taxpayer’s tax bill by 36 percent.

Winnetka, too, has tax incentives to diversify. Currently, 62 percent of Winnetka taxes go to support the schools, while only 13 percent is attributable to the village, according to Winnetka Is Neighborly, a community organization aimed at getting facts out on the affordable housing issue. Young adults and empty-nesters would help to spread the tax burden without driving school taxes up.

Despite the benefits, it is a fear of tax hikes that has some Winnetka citizens speaking out against the town’s proposed plan to incorporate less expensive housing into the village. Some of that fear arises from the proposal to create a housing trust. The proposed plan states that such a trust "can be financed through a variety of sources," including real estate transfer taxes and zoning fees, as well as donations, bequests and grants. None of these options is mandated.

Both towns’ proposed plans focus heavily on using existing housing stock and preserving existing rental apartments from being converted into office space. This dependence on existing housing stock seems to be fueled by a fear among both towns’ residents that new, smaller homes, and especially multifamily units, will lower existing-home values.

Research says otherwise

In 2005, Massachusetts Institute of Technology’s Center for Real Estate published a study, "Effects of Mixed-Income, Multifamily Rental Housing Developments on Single-Family Housing Values." The study looked at eight communities across the Boston metro area where large, mixed-income, multifamily developments were being introduced to single-family-home neighborhoods.

"These case studies represent some of the most dense and controversial … developments in Greater Boston," the report stated. "In other words, a suburban homeowner’s worst nightmare."

Researchers looked at the home values for single-family houses most impacted by the new developments and compared that data to home values of comparable control areas.

"The empirical analysis for each of the seven cases indicated that the sales price indexes for the impact areas move essentially identically with the price indexes of the control areas before, during and after the introduction of (the) … development(s)," the report concluded.

"We find that large, dense, multifamily rental developments … do not negatively impact the sales price of nearby single-family homes."

Claire Easley is online senior editor for Builder magazine.

© 2011 Hanley Wood. All rights reserved.  No part of this article may be used or reproduced in any manner whatsoever without the prior written permission of Hanley Wood.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top