ULI Terwilliger Center for Housing
Since 2018, Christopher Ptomey has served as Executive Director of the ULI Terwilliger Center for Housing. The Center leverages the vast knowledge and experience of ULI’s membership to advance residential development and housing affordability through research, local and national convenings and consultations, and the Jack Kemp and Robert Larson awards programs, which highlight innovative and best practices for improving housing affordability. In addition to his work at ULI, Ptomey currently serves as a governing board member for the Grounded Solutions Network and the National Housing Conference.
Former Senior Visiting Research Fellow
ULI Terwilliger Center for Housing
Michael A. Spotts is the founder and President of Neighborhood Fundamentals, LLC. He has over a decade of experience providing research and technical assistance to on-the-ground practitioners in both the public and private sectors, at every level of government, and in urban, suburban and rural areas. Prior to founding Neighborhood Fundamentals, he worked for Enterprise Community Partners, Inc. from 2009-2017 as part of the Public Policy team. During this time, he conducted research and analysis of affordable housing and community development policies. Michael serves as a member of the board of directors for the Arlington (Va.) Partnership for Affordable Housing and the Northern Virginia Affordable Housing Alliance.
The goal of the Terwilliger Center for Housing is to advance best practices in residential development and public policy, and to support ULI members and local communities in creating and sustaining a full spectrum of housing opportunities, particularly for low- and moderate-income households.
Dedicated to advancing Urban Land Institute’s capacity to connect, inspire, and lead, the ULI Foundation leverages its charitable 501(c)3 organizational status to secure and manage philanthropic assets and partnerships. This extraordinary tradition of ULI member altruism and goodwill serves to benefit and grow the ULI mission, changing millions of lives and improving communities around the globe.
[00:00:00] Adam Hooper: Hello and welcome. I'm Real Crowd, c e o Adam Hooper, and this is The Real Estate Investing for Your Future Podcast. Here we explore the latest in commercial real estate trends, insights, and investment strategies that passive investors can use to build real estate portfolios
[00:00:18] Michael Spotts: that last
[00:00:20] Christopher Ptomey: all opinions expressed by Adam Tyler and podcast guests are solely their own opinion.
And do not reflect the opinion of real crowd. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. To gain a better understanding of the risks associated with commercial real estate investing, please
[00:00:39] Michael Spotts: consult your advisors.
[00:00:41] Adam Hooper: Welcome to the next episode of our special series.
We recorded with our friends from Urban Land. This series was brought to you live from Ally's fall meeting in Dallas that featured over 45 sessions, 150 speakers, 240 events, and more than 5,500 members in attendance. In today's conversation, we're joined by both Christopher Toy, executive Director. And Michael Spots, the former visiting research fellow of U Eli's Tru Willer Center for Housing.
The goal of the Tu Willer Center for Housing is to advance best practices in residential development and public policy, and to support ULI members and local communities in creating and sustaining a full spectrum of housing opportunities, particularly for low and moderate income households. Our first interview is with Christopher Toy to discuss the two panels he moderated from the fall.
Attainable Housing for all and making affordable housing work for all views from the stakeholders. To learn more about Christopher and Eli's Truer Center for Housing in the fall meeting, please be sure to check the show notes. With that, let's get to the conversation. Well, Christopher, thank you so much for, for joining us today to talk about, uh, what y work is doing with the Tru Willer Center for Housing and talking about housing at accountability.
So, uh, before we jump in, why don't you tell us a little bit about yourself and, and the work that you do with U. Sure
[00:02:01] Christopher Ptomey: thing. I have, uh, been the executive director of OLIS to Willer Center for a little more than four years. I lead a, uh, small but mighty team of housing experts, advocates, and researchers there.
And, uh, previously I, uh, worked to help launch and lead Habitat for Humanities, US focused public policy and government relations operations. Um, worked with them for about a dozen years, and before that was the federal liaison for the Texas State Housing Finance Agency, which at that time was the Department of Housing Community Affairs.
And before that, spent about five years working in the House of Representatives. I worked for, uh, representative Matt Collins from Georgia. And housing was one of many issues, um, that I handled in my time, in my time on the
[00:02:44] Adam Hooper: hill. And, and so tell us a little bit more what, you know, what does your day-to-day look like and, and maybe what are the, what's, what are the areas of focus for the Towar Liquor?
[00:02:54] Christopher Ptomey: Sure thing. Um, well, the Twilio Center is part of the Urban Land Institute and we're the world's largest association of land use and real estate experts in the world. It's, uh, we have over 45,000 members globally. Um, our mission is to shape the future of the built environment for transformative impact.
And, um, U i's identified housing at Obtainability as a global mission priority. Mm-hmm. That we're gonna be focusing on over the next several years. And the Toller Center is leading the US focused housing work for uli, including its, uh, focus on at Obtainability. Um, the Toller Center at Oli was founded in 2007 by former Oli, board chair and apartment developer Ron Wilger and I.
I do make a point of saying the ULI to Willer Center because Ron has formed several to Willer centers at different organizations focusing on different aspects of, uh, the Global Housing Challenge. Um, but ULI Center was formed in 2007 and, uh, initially, Focused on, uh, workforce housing. And at the time, in 2007, that was generally interpreted to mean, uh, non-publicly subsidized housing affordable to those earning 80 to 120% of median income.
Uh, that workforce housing term has fallen a little bit out of favor with some in recent years, as most of those households that are earning less than 80% of median income are so overwhelmingly, uh, members of the workforce. And, uh, Extensive housing needs, but, um, uh, that was the term at the time and, and the initial focus of the center.
Over time, the Ger Center's portfolio has expanded to include all of Eli's, uh, US focused housing content. Mm-hmm. and our kind of high level goal is to identify and drive industry best practices and related public policies that enable cities to increase housing production and preservation. And in so doing, achieve better housing equity and attainable.
Um, the Tooler Center pursues us in several different ways. Uh, as part of our, our mission priority work, we're doing a lot of work directly with local members and with cities around, uh, the US to overcome barriers to production and preservation, again, with an eye ultimately toward equity and at sustainability.
Um, uh, and, uh, we have, uh, study panels that we host in cities. It's a really effective tool that ULI uses where we bring. Member experts in from all around the country. Mm-hmm. , uh, into a city for two to five days to evaluate a challenge and put forth recommendations. And we've done several of these as part of our mission priority work.
Recently we did one in Boise focused on the rapid population growth that they've seen. We did in one in Brooklyn Center, Minnesota. Focused on equitable investment in, uh, uh, an aging, uh, entering suburb that has been underinvested in needs redevelopment and just completed one in Sacramento looking at some of the absolute lead, uh, strip mall.
Mm-hmm. kind of, uh, commercial developments that have large parking lots and provide some opportunities to be transformed into walkable transit accessible communities. Um, and in addition to the study panel work that we're doing, we have an annual housing opportunity conference that we host it. next year.
It'll be in Phoenix from March 27th to 29th. And would encourage, uh, anyone interested to, to take a look and to join us there. And we have, uh, a research that we conduct on a variety of housing topics. We've done it on attainable home ownership in the past, on the need for, um, uh, renter, uh, family renter housing larger.
units. Um, we recently released a report on, uh, build to Rent and, uh, that growing aspect of the market. And then we have our flagship publication, which is our home at Obtainability index Analysis and report.
[00:06:31] Adam Hooper: Perfect. And, and we'll have links in the show notes to all of those different, uh, different resources.
And now one thing in, in. . You know, when you mentioned the, the start of this was around kinda workforce housing and, and affordability. I think that word affordability is something that we're more used to when we talk about this topic. Conscious shift from affordability to at obtainability. Again, it's a small word change, but maybe tell us a little bit more about attainability versus affordability.
Right. It seems like that's more encompassing than just the financial aspect of what housing costs and more about a bigger picture of, of the, the whole housing scenario. Is that, is that. .
[00:07:07] Christopher Ptomey: Well, it is, and I, I think to a certain degree, um, at a very general level, obtainability and affordability, um, can be used interchangeably.
I really prefer, um, and frankly, at the Ger Center, when we're talking about home at Obtainability, what we're talking about are the housing choices that are available. To lower in moderate income households and what they have to pay for those choices. Uh, I prefer at obtainability to affordability primarily cuz I'm trying to avoid a couple of different sets of false assumptions that people sometimes make.
I think first for, for people who aren't as familiar with housing and, and, uh, and development, sometimes a term affordable housing carries some bad connotations and people envision kind of sixties era high-rise public housing in a major city. , some of the infamous developments like Cabrini Green in Chicago, or maybe those that you saw in Mawi in Baltimore.
Uh, uh, uh, some time back. But, um, you know, it's been decades since that was the kind of publicly subsidized mm-hmm. housing, um, that w that's been built. And, uh, but even so, those images still. Can feed the fires of nimbyism and opposition to housing development because that's what people think is gonna be put into their neighborhood.
So I try to avoid it with that audience or with those audiences for, for, for that reason that it kind of has, has negative connotations mm-hmm. within the industry. There's a whole separate set of assumptions, which often mean, often the assumption that if you say affordable housing, what you mean is income restricted, publicly subsidized housing.
And um, and I don't want to kind of restrict our thinking to that either, either. I think, um, more and more housing at obtainability or affordability is a concern, not just for people at the very bottom of the income scale mm-hmm. , but for many moderate. Households as well. And, um, and, uh, and so, and, and there's not, uh, above 60% of median income.
There's not, uh, virtually no kind of public subsidy that's even available to help develop that kind of housing and no cash kind of subsidy either way. So, um, uh, try, I try to avoid kind of both of those sets of assumptions by. The term, uh, at obtainability instead of mm-hmm. affordability. Mm-hmm. . And then when we, in, in our work, we do kind of try to take a br broader view of it and not just dial in on, uh, on kind of average income versus average rent or average, uh uh, uh, or our average, um mm-hmm.
home price. Um, we. That markets are, are, are, are much more unique than that and operate in very different kinds of ways. And that, um, uh, when you kind of, uh, devolve to the, to the averages that you're not really capturing the picture. Mm-hmm. . And so when we talk about at Obtainability in the context of our home Obtainability index, for example, we're trying to give a broad view of.
of who can afford what, uh, within a region or a market. And, uh, and, and, and, and look more broadly again than just the average, but looking at a variety of housing types that you might be interested in of, of, uh, types of tenure and, uh, and what the cost is, is, is for that. So, uh, along a long answer, yeah, but I think it's important.
I think, you know, these are, I. There's some important reasons. Mm-hmm. to, to draw the distinction and that I avoid the affordability term or particularly affordable term. Term
[00:10:41] Adam Hooper: affordable assets. And, and now how are we doing here in the us Right. I mean, we're, we're coming, we're a couple years past the beginning of the covid crisis.
We're recording this in late 2022. So we're seeing massive inflation. We've got interest rates increasing. We saw through the, through the pandemic. , outrageous rental growth, rental rate growth in, in a lot of multi-family properties around the country. Um, home prices spiked. Maybe we're seeing a, you know, the start of a correction there.
How are we doing in regards to housing at Obtainability here in the us?
[00:11:14] Christopher Ptomey: Uh, the short answer is, is mm-hmm. , terribly , I guess kinda leading question. I think our, our most recent, yeah, yeah. Our most recent home attainability index, um, actually draws on census data. Prior to the leading up into the, uh, uh, into the pandemic mm-hmm.
And so even before the pandemic started, we had a very, very difficult situation nationally. And our home at Accountability Index looks at the, at the a hundred most populous, uh, MSAs, A plus another dozen or so that are, uh, that are important to our, our DUI network. And so it's, it's our. Cities by and large that we're looking at.
But those are where we're seeing the, the really the most pronounced problems. Mm-hmm. , I think there's nowhere in the country, um, that's adequately or even close to adequately providing for households at the very, very low end of the, uh, income spectrum. So the extremely low income households or the very low income households, those are any.
Than 50% of the median income. Um, there's nowhere in the country that, that, that they have good choices. Mm-hmm. are, are able to spend a reasonable amount of their monthly income on housing. I think, um, uh, more and more, um, as I mentioned before, it's reaching higher up the income scale. We're seeing more and more people at higher incomes, uh, who are becoming cost burdened.
Um, and uh, and what we saw. during the pandemic was a massive runup, not just on the price of homes. And we certainly saw an incredible, uh, uh, runup in prices on the ownership side, but we've also seen a massive runup in rents. Yeah. Um, today we have. About, uh, half the country, that's what's considered cost burden, which burdened, which is paying more than 30% of the household income on housing.
And we have over a quarter of the country of renters in the country who are severely cost burden. And so that means they're paying more than half of their incomes on housing. And of course, The lower you go down the income scale, um, uh, the, the higher, the impact that is of having to commit half of your income, uh, uh, uh, just for your housing, housing alone.
So, um, massive, massive challenges and not just kind of on the ownership side that's gotten all the press, um, uh, where it's really impacting, um, uh, households. Their kind of ability to live their lives is, is on the renter side. Mm-hmm. . And, and, and we're seeing challenges there that we haven't seen for a long time.
And I think, um, uh, we, we have a very long, uh, it's gonna be a very long runway to start making inroads on that. Uh, at the end of the day, cuz all of this comes back to a, to a housing shortage, a mismatch between supply and demand. And again, going into the, uh, pandemic, we were already looking at. 3.9 million unit shortage is what up for growth has, uh, has suggested in a report they released recently and it's just gotten more difficult and more expensive to build housing, um, uh, through the pandemic and then, and then post pandemic.
So, uh, it's gonna be very difficult to begin to catch up, particularly in the larger cities. And, uh, it has gotten more difficult to do so with the economic challenges. that we're, that we're seeing now. So, uh, it's, it's, it's gonna be a very heavy lift, uh, to begin to, uh, to
[00:14:39] Adam Hooper: address this issue. Well, and before we start talking about some of the areas of focus that, that u Eli is looking at and some of the areas for opportunities there, h how with Uli being a global organization, How much of this is unique to the US or is this a global challenge and, and maybe are there some areas that you're seeing some brighter spots or different, um, dif different components of this?
Or what are you seeing outside of the us? Again, I think we have a oftentimes kind of a myopic view of, of what we're seeing just here in our local regions. Um, with Oli having a global scale and global reach, what are you seeing outside of the.
[00:15:19] Christopher Ptomey: Well, I think, uh, you know, it's, it, it's in many ways hard to compare the, the, the different regions. From a housing standpoint. I think you do have challenges wherever you are. I think I just saw a report today that came out that said the two most expensive cities to live in the world. Or New York City in, in, in Singapore.
Um, and, um, and housing is definitely a major driver of, uh, that overall mm-hmm. cost, uh, cost of living in, in, in both cities. Um, but I think because you have such different kinds of housing systems and government systems, it, it can be very difficult to make those comparisons. So, um, , while both of those cities have very high cost of living, obviously in Singapore, where you have, uh, a very powerful, uh, uh, uh, centralized government, although it's a city state, um, it's still a very powerful, uh, uh, government that controls all of the housing, uh, in, in the city of Singapore versus uh, uh, market based system.
Mm-hmm. in the US where, uh, the government subsidized housing. , New York City has some, some rent controls and some other pieces in place, but, but not nearly the kind of, uh, control that you see in Singapore. Yeah. So it's a little bit difficult to make comparisons, but, and I think the other thing is, in a lot of places in the world there are major housing quality challenges.
particularly if you're looking at Asia, um, uh, certainly there are at Obtainability Challenges and, and some of the larger cities there are can be incredibly expensive places. Um, To, to acquire housing. You also, from a general population standpoint, have many countries in that area, the world that have a very basic housing quality challenge.
Mm-hmm. , that that has to be, um, addressed at a level that fortunately, uh, we don't currently see in the us. I, I. And, um, . At any rate, I think, you know, ULI has identified this as a global mission priority. Mm-hmm. , because no matter where you are in the world, and no matter what kind of governmental system or housing development system you have, um, uh, it's rare to find cities that are adequately providing the housing that.
That their residents need at a cost that they can afford. So there is that commonality. Again, I think the solutions that you see at the end of the day, um, are different depending on where you are. Mm-hmm. in, in Europe, uh, you kind of have a middle ground with social housing between, uh, some of the heavy government controls that you see in Asia versus, uh, a more market based system in, in, in the us.
Um, and, uh, you do have housing quality challenges in the Europe. In Europe as well. As you do, but not as pronounced as you do in, in, for the general population in many parts of Asia. So, um, uh, there, there are some similarities, but I think it's, it's hard to generalize, uh, uh, about the housing challenge globally.
Yeah, it's, uh, it's, it's unique where you are and the solution.
[00:18:06] Michael Spotts: I guess
[00:18:06] Adam Hooper: my hope with that question was, has anybody figured it out and what can we learn from them? . But I guess it's not, uh, it's not that easy, unfortunately.
[00:18:14] Christopher Ptomey: You know, I think, no, I mean, I have, we do have some members who think they figured it out in Singapore, but I, I think that everyone who live who lives in Singapore wouldn't necessarily
[00:18:22] Adam Hooper: agree with that.
Yeah. So, you know, a common thread with the conversations from fall meeting is, you know, a lot of these challenges, they're, they're very large, they're very broad. They're, they're very long term challenges that we're trying to, to address. Um, but there are some things that we can be doing in the near term.
Right. So maybe break down a little bit. What are some of the. More near term areas of focus or hope or, um, initiatives that, that listeners can start to pay attention to or think about as they, as they look at housing at obtainability. Um, and then maybe what are some of the areas that you're hopeful for?
Will, will start to have some, some impact here?
[00:19:01] Christopher Ptomey: Absolutely. I think, uh, you know, to a certain DEG degree, the level of housing crisis that we've reached. Giving visibility to housing in a way that it hasn't, uh, to a level that it hasn't received in the past. Mm-hmm. . And I think it's setting the stage for some cities to begin to make some, some real progress.
Um, and I think, uh, uh, certainly there are many cities and states around the country that are looking for policy-based solutions. You have states like California where you really. Uh, some very strong policies that have been put in place at the state level to force, uh, local government's hand in, uh, addressing the, the issue locally.
Um, I think, uh, Jeff Barton, who was on one of the panels that I moderated at Eli's fall meeting on making affordable housing work, um, his perspective was from, from Texas and from some of the policies that are being implemented locally, uh, to help incentivize the production of the. that cities need there.
So in places as as different as California and and Texas, you see a real understanding that there's a need for housing. And even though you have very different kinds of, of systems and balances of government powers in both of those places, there's strategies that are being put in place by government. to help get additional housing put on the ground and to meet, um, the gaps that exist.
I think, uh, another area that I think we're seeing a lot of more opportunities on the finance side, um, and we're, we're gonna need a lot more ideas on that side, uh, likely with the, uh, with the economic, uh, uncertainty that we're facing now. But, uh, again, from that making affordable. Work panel that I, uh, that I moderated at the fall meeting, uh, Nick Colusa with Goldman Sachs and Matt Falcon with, uh, CAF funds talked about, um, uh, some of the opportunities that are available.
Some are, are housing gse, uh, supported opportunities. So Fannie Mae and Freddie Mac getting involved in providing low cost financing and other opportunities to get some lower cost units on the ground is really helpful as well as opportunities that are, uh, appearing in the capital. And I suspect you're gonna continue to see growing interest in, uh, in the moderate income and lower income housing in an uncertain economic environment because you have, uh, you have guaranteed low vacancy rates.
And often if, uh, if you have residents who are receiving vouchers or some other kind of, uh, of public subsidy, you have guaranteed mm-hmm. . To help pay, to help pay for those units. So I expect that some of the opportunities that they were pointing out in, uh, in the capital markets, were gonna continue to see grow at a time when, uh, when we have economic uncertainty on the ground.
Um, and yeah, I was saying, I mean, it's
[00:21:52] Adam Hooper: a similar dynamic in some of the conversations we've been having around sustainability and, and kind looking forward to the future there of most, if not all, of real estate development is a profit. enterprise. Right. And so when you look at some of the challenges of, uh, just the costs of, you know, certainly as you mentioned during the pandemic, construction costs, skyrocketed, land availability, um, you know, zoning, all of those issues that make developing new product Yeah.
All the more expensive, you know, is that kind of at odds with attainability? I mean, how, how do you see. outside of some of these more creative financial products or structuring, how
[00:22:31] Michael Spotts: does that, how do we overcome that? Well, I, you
[00:22:34] Christopher Ptomey: know, I think at the end of the day, we have such a shortage of, of, of housing that it can, uh, that investment can look like it's distorting the market and, and, and it may provide, uh, some distortion, but again, it's a result of an.
Um, scarcity that we're seeing, that we're seeing in housing. And I think at the end of the day, having, uh, having more investment in housing is always gonna be, uh, is, is always gonna be a better thing. We, we don't have enough housing on the ground. We don't have enough financing there to get all of the housing that we need on the ground and.
And until we, we start getting close with that, I think, I think we, we need to look for, um, for that, for that additional investment and realize that kind of any distortions that it's causing are, are a result of the broader mm-hmm. , uh, mismatch between, between supply and demand. Um, I do think that it's, it's, uh, Cities can, at the end of the day, help ensure that they're getting, uh, the product that they want on the ground and available to the people who live there.
I think that, um, we're seeing more cities and states realizing that, you know, first and foremost, you have to go out there and legalize the housing, right? You have to open up your, your, your zoning and your building codes and, uh, make it possible to add density. You gotta rationalize your entitlement processes.
You gotta streamline those process. Shortened timelines, particularly in an inflationary environment, so that uh, developers have a reasonable, can have reasonable expectations about how long it's gonna take to get a, a project on a, on the ground and what that's gonna cost. Mm-hmm. , and then cities can incentivize what it is that they want to achieve at the end of the day.
They can. They can provide, uh, tax incentives to get the units, uh, that they want on the ground, as well as, uh, putting requirements in, in, in place and ensuring that, that, uh, you know, inclusive strategies are, are one way that cities are doing that. Um, um, but they can put incentives in place and developers will provide, uh, will, will create those units, units, um, if they've been planned for and incentivized and then, At the end of the day, subsidies are gonna have to be provided.
Mm-hmm. , and there's just not enough subsidy in place right now to enable the development, particularly for households that are earning 30% of, of media income or below. There's just no way to make those, uh, make those units pencil and without substantial more, uh, substantially more. Public investment, uh, we're not gonna be able to get those, uh, those units in place.
Even if you're able to address the land cost and development costs and, and, and some of the other things that, uh, that, that can enable market rate development to reach deeper, you're not gonna get to that, that very low income. Yeah. And you
[00:25:21] Adam Hooper: mentioned, um, some of the studies and, and research you guys have been doing.
Um, one is in Sacramento about maybe repurposing in a little preview for the emerging trends. Um, this reuse and, and change of use is a theme that, that, you know, we've certainly seen with, whether it's extended stay hotels being converted into to multifamily properties. Um, how, how much of an opportunity do you think there is in repurposing some of these other asset classes or their uses and, and turning those into more of an affordable housing, uh, attainable housing opportunity rather than the challenges of building new product that that fits within that income.
[00:26:00] Christopher Ptomey: Yeah, I think there's a lot of opportunity there. And I think, I think certainly, uh, with, uh, kind of the reshaping of, uh, of, of office, um, we're gonna, we're gonna see additional opportunities coming on board there. I think there've been some creative solutions in place. Of course, it can be difficult, um, with the floor plates of, uh, of lots of office buildings to convert those, but we're seeing some really.
Ideas, uh, uh, coming forward that enable that to happen. Sometimes, of course, the redevelopment is gonna have to be, uh, at the property level rather than at the building level. Mm-hmm. . And, um, but I think all of those are opportunities they're gonna have to be taken advantage of. Um, and, uh, uh, but I think there's, you know, uh, with, again, with the.
with the challenges that we're seeing, particularly in, uh, office markets and places like Washington, dc um, you're gonna have to see those properties repositioned in some way. Mm-hmm. . And so I think there'll be a substantial amount of opportunity to, to, to add, uh, units and hopefully some units affordable toward the, the lower end of the modern income scale or the low income scale.
[00:27:07] Adam Hooper: Perfect. Well, Christopher, I think that's a great spot to, uh, to wrap it up. Why don't you let listeners know how they can learn more about the work that you are up to with, uh, OLIS to Wilger Center for Housing.
[00:27:19] Christopher Ptomey: Absolutely, please visit the ULI website. It's uli.org g, and uh, you can, uh, uh, find the Toiler Center there and, uh, links to all of our research, our Housing Opportunity Conference.
Again, that's gonna be in March in Phoenix, um, as well as our home Obtainability index and, and other resources. So please, uh, find us online and, uh, and come see us at one of Ally's events. Sometimes either, either one of. National Advanced.
[00:27:46] Adam Hooper: Thank you, Christopher. Next you'll hear from Michael Spots, the former visiting research fellow of olis to Willer Center for Housing.
In this interview, Michael shares insights from his three panels, leveraging Eli's home at Obtainability Index, multi-generational living, enhancing housing and neighborhoods to meet evolving human needs, and discovering RCL CO's new housing momentum. We hope you enjoy the conversation with Michael Spots.
All right, Mike, thank you so much for spending some time with us today here, and you've been a, uh, you've been a pretty busy guy. You've got three different panels and presentations, so we appreciate you carving
[00:28:21] Michael Spotts: out some time to share with us. Oh, thanks for the opportunity to talk with all of
[00:28:23] Adam Hooper: you. Tell us a little bit about yourself and, and what you're doing here with you, Eli, at the fall meeting.
[00:28:28] Michael Spotts: So I am the Senior Visiting Research Fellow for the Tooler Center for Housing. The Tooler Center is the main program at ULI that focuses on the full spectrum of housing needs, uh, with a focus on, uh, moderate income and, and lower income housing opportunities. We focus not just on, um, you know, So programs and subsidies for, uh, affordable housing, what we call capital a, capital affordable housing.
But, but we look more broadly. We look at sort of the broader at obtainability of the housing market mm-hmm. and the ability of housing markets to reach the full spectrum of needs. And so, visiting
[00:29:01] Adam Hooper: research fellow, uh, what does that,
[00:29:03] Michael Spotts: what does that mean? So, um, I have worked, uh, the, the Tooler Center, uh, has had.
A visiting research fellow for a period of time. I believe I'm either their second or third, uh, visiting research fellow, where they bring in people that have, uh, research expertise, uh, and in some cases an outside perspective mm-hmm. to help, uh, inform and execute the research agenda. And, and the research that we do at the Tooler Center, um, is very, Practitioner oriented.
Mm-hmm. , and I call myself an applied housing policy researcher, which is, uh, what I try to do is bridge the sort of empirical literature, the understanding of best practices and the evidence-based for specific policies and we're, and that that type of research can often be very technical. Mm-hmm. in nature, and we take.
That body of knowledge. And then we leverage Eli member base, the, the, the practitioners, the people that are out there and doing it in the field. And then we work to speak with Oli members in the context of. Of, of that evidence base, um, work to identify the challenges that are out there in the field mm-hmm.
and then come up with practitioner oriented solutions that are, that can be implemented out in the field. So we're really sort of
[00:30:14] Adam Hooper: actually operationalizing what the research and
[00:30:16] Michael Spotts: the data shows Exactly. Yeah. Trying to, trying to get that sort of, uh, take things down from what, what can sometimes people derogatorily call the ivory tower.
Yeah. Um, and try to ground that, uh, with, with people's experiences actually. Development practice and trying to make that all translatable and accessible for people that are on the ground doing the work. Good. Well, let's
[00:30:36] Adam Hooper: try to cover, um, as much as we can in, in a short time here, the, the panels that you were on.
Sure. Um, so first tell us about the home at Obtainability Index and, and the tools that you're putting out and how listeners might be able to, uh, take advantage of that and learn from that data.
[00:30:49] Michael Spotts: Sure. So we, we know, we knew when we started out this project that there was an appetite to use data in terms of.
Our engage in people's engagement work and development practice. So a lot of development practitioners, uh, a lot of housing advocates have to go into community meetings. Mm-hmm. , they have to meet with, uh, planning officials who are often volunteers. They have to meet with the financial sector. And people that are doing development work on a day-to-day basis are often familiar with data, but they don't have the time to know every.
Data point that's out there. Mm-hmm. . So what we wanted to create is a one stop shop that provides a snapshot of the extent to which a housing market is meeting the full range of housing needs. Mm-hmm. . So we, we pulled together an array of 26 metrics that fall in a range of different categories, overall affordability, home ownership, and rental at accountability.
neighborhood opportunity and access and housing production. And we created a set of practitioner oriented tools that people, that anyone can access, uh, so that they can better understand the housing challenges in the regions in which they work, and translate that information to people that, uh, are not housing experts, but may be making decisions that affect housing development.
Writ large. And I think one of the exciting things about that tool is our occupational analysis. So we partnered with the National Housing Conference and they're used their paycheck to paycheck data that compares real world wages, median wages mm-hmm. for various occupations within a region to the real housing prices within that region.
And you can calculate whether certain occupations, uh, earn enough to afford housing. Mm-hmm. that that really puts a human face on some of these at Obtainability challenges. Yeah. Where you can go to an elected official and say, well, the. Home health aid would need to double their salary in order to afford just a modest two bedroom rental in our
[00:32:35] Adam Hooper: market.
Right. Yeah. It makes it much more real, like you're saying, taking the the empirical into the, the real world. Um, so attainability versus affordability. We talk a lot about affordability. Can you kind of contrast attainability seems like that's more. Encompassing than just the financial aspect of it? Well,
[00:32:50] Michael Spotts: so what we've been using at Obtainability, just because the word affordability is so loaded with different meanings.
Mm-hmm. , not even, in some cases people use it as a pejorative, but not even, it just gets often is confused with the ability to produce subsidized income. Restricted affordable housing. So we. Um, we have worked to try and use the phrase at Obtainability mm-hmm. , because that, we want that to convey that is, uh, the broader sense, uh, the, or the extent to which the broader market is providing housing choices that mm-hmm.
fit people's specific needs. Okay. Uh, but also the budget. Perfect. So, you know, it implies just, you know, diversity of housing choice, diversity of housing in terms of typology, but also tenure. Yeah. Uh, as well as well as price points. So we're, we're, we think we tr we're trying to use the terminology of at Obtainability to convey the.
Uh, the effective functioning of a market of meeting, the diversity of housing needs. Great. And then,
[00:33:46] Adam Hooper: so what are some of the other findings when you're looking at this data that, that, um, maybe you didn't expect to see or that was interesting to you when you were compiling all the
[00:33:53] Michael Spotts: data? Right. So our home at Obtainability Index focuses on, um, longstanding durable challenges.
Mm-hmm. , uh, we're using predominantly metrics that are derivative of US Census Bureau data, so there's a little bit of a lag there. Um, so what we did this year was we, uh, analyzed our data in the context of Eli's emerging Trends in real estate report. Okay. Yeah. Which uses qualitative observations from market practitioners about real estate sentiment about where the trajectory of markets are going.
And we, we were looking at. emerging trends, uh, in the con in the context of these durable challenges and what we, one, one of the main, two of the main takeaways that I have is that, you know, lower wage workers struggle to find housing pretty much anywhere in the country. Even you're mm-hmm. and even the markets that are perceived to be the lowest cost, uh, if you're a childcare worker, if you're a home health aid, if you're a nursing assistant, you know, these are critical occupations.
Yeah. And they can't even afford rental, the rental housing in, in many of these. almost all markets across the country, regardless of geography, market type. The second key observation that I have, uh, when I'm looking at the data is when we looked at this emerging trends data, you know, we constantly are hearing about how the high cost coastals are losing competitiveness.
Mm-hmm. of. because of the high cost of doing business, the high cost of housing, the high cost of living. And, and to a extent that may be true. I'm not saying that that's not true, but what we're seeing that is in a lot of the markets that the people are moving to sort of those magnet markets as emerging trends of Henson.
Mm-hmm. , the, the Nashvilles, the Austins, the Atlantas, um, they're not producing as, even though they're producing a lot of housing in terms of actual numbers, when you contextualize that and compare. with household growth in those regions, those markets are actually tending, lagging behind some of the sort of third tier markets or fourth tier markets.
And so there's a real risk that these markets, uh, despite the perception of being booming from a housing supply perspective mm-hmm. , um, the demand is so great that they may be falling following further behind that, in addition to the jobs and people migrating to the region. Affordability challenges and attainability challenges might be migrating with those jobs and
[00:36:00] Adam Hooper: people.
Interesting. And maybe that's a good, that's a good tie into the, uh, the RCL codes, uh, the new Housing Momentum index. Tell us a little bit about that, and that was another panel that, uh, you presented
[00:36:09] Michael Spotts: on. Sure. So we, this was another way that we were looking to address, um, the data limitation of the home attainability index.
Mm-hmm. and to try and look at sort of trends over time. And we worked with Rcl Co and Rcl Co. Um, we, the methodological brains behind this, and we provided. Some of the applied technical expertise, um, to develop an index that looks at the trajectories over a 10 year period, among three critical elements of what the housing market, housing supply growth, housing, the diversity of the housing stock, and the changes in the diversity of the housing stock over time.
And rental cost burdens, which we view as kind of the canary in the coal mine. Mm-hmm. for a poorly functioning market. If rental, uh, if, uh, rental cost burdens start to, um, Uh, rise. Mm-hmm. . Uh, so we looked at those, those three dimensions to create an index and looked at the trajectory year on year change over time.
And we looked at it from the perspective of the concept of momentum. And so momentum, uh, to use an analogy of an object, emotion. Let's just use a, a locomotive or a train. Yep. Um, that is the sort of rate. of acceleration, uh, which is distinct from progress, how far you've gone mm-hmm. or speed, how fast you're moving.
It's, it's the, we're looking at sort of the slope of those changes over time. Mm-hmm. , so that rate of acceleration, like we are increasing your speed by 10 miles per hour per second. Um, you know, or, so we're looking at things like are you increasing your, to what extent is your inventory increasing on a year, on year basis, and is that rate of increase going up or down over time?
Mm-hmm. is your housing stock. Rapidly accelerating to become more diverse or less diverse. And are your rental cost burdens, um, uh, getting better or worsen at what rate? Uh, and so what that we have this concept of momentum to see which, uh, jurisdictions are really moving the needle. Mm-hmm. in terms of, uh, Addressing some of these critical housing challenges.
And then we contextualize that with progress because you can have a lot of momentum but not have as much progress because you can be trending in the right direction along all these indicators. But if, uh, you're, you're starting from a lower baseline mm-hmm. , you can someone that has sort of slow and steady growth, um, at a higher level, we'll be making much more progress.
So, so part of the overall, uh, data tool looks at both. And progress for 150 markets from across the country.
[00:38:28] Adam Hooper: And so for investors or builders or, uh, developers out there, how can they, how can they use that data for making better decisions? Right? Or are, is this a predictive tool? Can they gain insights about, I mean, maybe in the context of these, these magnet markets that you just mentioned.
Um, are there insights in there to. Maybe where some of these might be on the surface look like they're doing really great, but maybe there's some momentum here that's, that's maybe not progressing as quickly as they, they could be
[00:38:53] Michael Spotts: at the surface level. Right. So I think, so to an, an example might be helpful in illustrating this dynamic.
So you have Houston and Los Angeles. Houston, uh, you know, they, these two markets have very different market perceptions. Uh, Houston, you know, has the build, build, build reputation. Mm-hmm. , los. Not so much right. . Um, and, but Los Angeles is among the regions with the most momentum, and Houston is among the regions with the worst momentum.
Interesting. Uh, and when you look at the individual components of the index, it's because Houston's. Inventory growth is at a higher rate, but it's, it's a little bit, it's, it's not trending upward. It's, it's trending upward. And so it's has momentum in terms of adding inventory, but so does Los Angeles. So there's only a marginal difference there.
But Houston is going in the wrong direction in terms of rental cost burdens. Uh, the, there we're seeing an increased trajectory over time where year on year change in rental cost burdens. Where rental are getting worse. And then in terms of housing stock diversity, Los Angeles is making more progress and d diversive or, or has more momentum in diversifying their housing stock.
Interesting. So, but so what we're seeing, what that tells us is that, um, that's not to say that Houston is doing necessarily a worse job than Los Angeles. It could be telling us they might be seeing some headwinds mm-hmm. among some of these different factors. And maybe those headwinds are sort of regulatory in terms of diversifying the housing stock.
I, I haven't taken a deep enough dive into the market to know if that's the case for sure. But it also could be just, uh, with, on the rental cost burden side, cuz that's the area where the discrepancy is largest. Mm-hmm. , it's just, The huge increase in demand because they are building, they're continuing to see that influx of population.
Yeah. And so that, that gaining momentum moving forward might be even more critical. Now when we look at progress, uh, Houston has a better progress ranking, uh, than Los Angeles does. In part because that higher baseline, you know, they're on an average year to year basis, they are making more progress in terms of their housing inventory and their housing stock diversity.
Um, a little bit less so on the rental cost burdens. , but you can see that had that interplay where you can have more momentum. Will make be making less progress. Yeah. And we think there's are independent factors that each are relevant and tell us something different about the market. Right. Um, but it's helpful to look at them in the whole totality of the context.
Yeah. And then you talk
[00:41:16] Adam Hooper: about the housing stock diversity. Um, which again, you're just giving me all the lead-ins here. Your, your final panel, which was on, uh, multi-gen, multi-generational living. Um, Dan brought up, and you know, his book that he wrote recently, the Missing Middle Housing. Right. Maybe talk a little bit about.
when you look at diversity of housing products, what are you really talking about there and what are some of the things that you're looking
[00:41:37] Michael Spotts: forward for? Well, if you look at, you know, it's helpful to think of diversity of housing products in terms of the diversity of housing need. Mm-hmm. , and that's like every family's different.
Every household is different. Mm-hmm. . Um, and with all, if we have a population as diverse as ours, both in terms of age, demographics, culture, um, income mm-hmm. , that to think that our zoning policies, which could encourage more one size fits all housing solutions mm-hmm. , uh, is gonna be adequate for meeting that diversity of needs.
Um, is, is just misguided. So when we talk about diversity of housing choice, we talk about, you know, Typologies, you know, the missing middle is what is most commonly, uh, what is, which is, which is most commonly talked about, uh, in the current dial national dialogue. I would say in terms of diversifying our, our predominantly lower density mm-hmm.
single family neighborhoods. But we can also look at it from the other direction. Uh, you know, our urban cores, many of which are experiencing a lot. redevelopment, a lot of growth, but a lot of that development and redevelopment and growth is adding one and two bedroom and studio apartments. Mm-hmm. , so diversifying our housing stock in those communities may look, some may look a bit different.
It may be more family size units. In some cases it may mean, um, more variation in density in given maybe the same total number of units, but in different structural types. Mm-hmm. , um, and with variations in height, you know, so. , the diversity that is needed to be added is gonna be different in every community.
Mm-hmm. . And so to, one of the takeaways from that, from poll for policy for me is the need for, um, Regulatory and zoning policies that encourage adaptability and evolution. Right? So let's not, um, let's not micromanage, let's not think that we're any more patient, uh, now than we were 20 years ago. Yeah. Or 30 years or 40 years ago, that we can, um, Legislate the perfect mix of housing types and solutions and, and encourage that sort of more organic growth and change in communities.
[00:43:42] Adam Hooper: Yeah. And not to blame everything on zoning, but you, you mentioned that this concept of kind of the last 50 to 70 years, like modern zoning, right? The communities and neighborhoods that were built pre that time. Have a more, seem to have a more diverse base of housing and they, they kind of meet more the traditional communal sense of what housing is.
Right. So I guess how are, are you seeing. More openness. Are you seeing a change towards more adaptive zoning? I mean, what is the, the temperature in that side
[00:44:12] Michael Spotts: of the side of the world in fits and starts? And to tie back to our last conversation, I do think we have positive momentum . Yeah. Um, but that momentum is uneven across the country and it's almost always contentious.
Yeah. Uh, and I think it's really out of this housing affordability crisis, right. That, you know, there's more and more occupations that for which people can't afford housing. We're seeing more people, more and more people struggling to meet the needs of an aging parent or a, or, or sort of the boomerang young adults that are, are moving back in part because of the housing market in some cases.
So we're seeing some zoning reforms to encourage more housing type diversity. Yeah. In um, In a lot of different areas and a lot of different market typologies. Some are statewide, you know, California and Oregon have both adopted statewide ordinances that apply pretty much everywhere. And then on a mun, at a municipality by municipality basis, we're seeing some progress, uh, and some momentum, but it's by no means the norm and there's gonna be a lot of, you know, blocking and tackling that's gonna need to happen to.
See this happen at scale unless state governments start getting more and more involved outside of sort of the, some of the more notable examples like California and Oregon. Yeah, and one of the
[00:45:18] Adam Hooper: questions that was asked in that panel I thought was, was interesting was the, the needs of a family change over time, right?
You've got the core family, you maybe you've got the, the elder generation that moves in at a time. You've got the kids that maybe move out, maybe they come back. There was just some interesting concepts there about how the, the use of, of a home can change over time. Right. In this concept of multi-generational living, um, I, I would think just again, my.
my guess on this is as a country, we're, we're far less multi-generational than many others, right? In here in America. Um, what can we learn from other, um, cultures that are doing more multi-generational living? And, and do you see that coming back into how we look at housing here in the States?
[00:46:01] Michael Spotts: Well, you know, I'm not an expert in international housing models.
um, I can't, I can't really give you a definitive answer to that question, but I. Can behoove us to look at the diaspora within our own communities. Yeah. Um, yeah, I know that a lot of, uh, you know, anecdotally I live in Arlington, Virginia, which is, you know, of one of the wealthiest counties, uh, in the country.
And right next to the, right next to Washington, DC we a lot of housing demand, it's technically a suburban area. Mm-hmm. , but, but in some areas we have some density that is higher than the, uh, the District of Columbia itself. Mm-hmm. , uh, but there's, you know, a lot of fights over our single family neighborhoods.
And one of the flash points is the McMansion. Mm-hmm. . Um, and so we see a lot of, you know, nine. Thousand square foot single family homes get torn down and replaced with 5,000 square foot homes. Mm-hmm. and, and what we see in many, in some of these cases, um, they are accommodating multi-generations in the, these are obviously if you're building a house that large, they're, they're we people on the wealthier end of the income spectrum.
Mm-hmm. , which leads out the issue of affordability, which is, Uh, another dimension that we have to pay attention to, but even at the, the wealthier end of the income spectrum, we're seeing people that are part of the reason they're building such large houses is to accommodate multi-generations. And because of our single family exclusive zoning, that just has to take the form of an enormous single family home, right?
But those multiple generations won't necessarily live there forever. So there's this demand, uh, for zoning flexibility. And, and, and we've heard that. Particularly important in sort of some of the wealthier diaspora communities. Mm-hmm. , um, where sort of there's more of a, a cultural obligation to, um, take care of your elderly Oh, your older relatives, uh, within the family home.
Right. The family setting and that, that is, can, can be a driver. Again, it's just, I don't have data on it. It's more anecdotal, but we, we've heard that, that this is, uh, a key, one of, one of the many drivers of this sort of major home expansion trend is the need for intergenerational living. Uh, driven in part by the diaspora community, and so we need to sort of honor, think about that as we're thinking about policy change that.
You know, people find a way to meet their needs and this is one way it manifests itself. Yeah. So if we create more options, can we manifest itself in a different way that is more affordable and sustainable on the long run? Mm-hmm. . So maybe it's a zoning change that allows a duplex or a triplex or something that can.
Flex between, uh, a single double or triple over the lifespan of the property, right? So that as people's life, uh, life circumstances change, that they're able to accommodate that. Um, and maybe, you know, Provide more housing in the process.
[00:48:41] Adam Hooper: Yeah. Well, that's perfect. Uh, again, super fascinating stuff. We, we can talk for hours on this, so appreciate you sharing your time.
Uh, we'll have links in the show notes for, for all these resources. Um, we can tell the listeners how they can learn more about what you're up to with uli.
[00:48:53] Michael Spotts: Sure. Um, if you, uh, visit the Urban Land Institute's Wilger Center for Housing webpage, you'll get information about all of our research products, um, as well as some of the other.
Work bodies of work that the Touger Center undertakes, we ha, uh, promote best practices and excellence through our awards programs. Mm-hmm. , which we announced at this meeting at, at, at fall meeting, uh, yesterday, as well as our technical assistants and advisory service panels where. We reach out to and work with communities across the country to solve real world housing and community development challenges, and the reports for those panels are available on our website as well.
[00:49:30] Adam Hooper: Thank you to both Christopher and Michael for joining us. Remember, you can learn more about Christopher, Michael, and the i's True Willer Center for Housing by checking the show notes. To learn more about the Urban Land Institute, head to uli.org and stay tuned for the next episode in the series.