Sandwiched between a nondescript duplex and industrial warehouse in the Irish Channel neighborhood of New Orleans, a modern, two-story home stands out from its neighbors thanks to a slender profile, angular roof, and corrugated-metal cladding. With an area of 975 square feet, the structure is diminutive, but this is no flavor-of-the-month tiny house: it’s the proof of concept for architect Jonathan Tate and developer Charles Rutledge’s Starter Home* program—a model of infill development that turns underused, unbuildable lots into entry-level residences.
The Office of Jonathan Tate is a small entrepreneurial firm that opened up shop after Hurricane Katrina. Prior to that, Tate was based in Memphis and Boston and was a partner at Building Studio (one of its more high-profile designs was a prototype for Brad Pitt's home-building nonprofit Make It Right). For the most part, Tate's work centers around single- and multi-family residential projects and conceptual designs. "We see housing as the fundamental building block of cities, but also as a tangible vehicle for exploring larger social, political and urban issues," Tate says. "It’s also personal: we’re all dealing with this issue and taking a critical position seems like the most obvious thing for us to do at the moment."
Make no mistake, 3106 St. Thomas is not an exercise in affordable housing; rather, it’s a development targeting mid-range home ownership—a segment of the market that has been ignored in recent decades.
A Housing Crisis Decades In The Making
The original starter home—usually an affordable one- or two-bedroom—grew, like many contemporary notions of housing, from post-World War II America. Levittowns, Eichlers, and Sears kit homes were marketed to first-time home buyers. Tate argues that over the decades, houses morphed from a consumer good into an investment commodity, which in turn led to developers building cookie-cutter starter homes based on what they deemed to be the most likely to appreciate in value. Houses became more expensive to purchase and maintain, their sizes ballooned, and they were increasingly located in areas far removed from established neighborhoods since it was less expensive to buy greenfield land.
In 2015, the Wall Street Journal reported that homeownership in the United States dropped to 63.5%, a 48-year low. Economists argue that incomes haven't kept pace with the rising cost of homes, pricing many young buyers out of the market. According to a 2014 U.S. Census report, the average size of a new single-family home built in 2013 (the most recent year from which data was available) is 2,598 square feet, up from 2,095 in 1993. Additionally, only 10% of new homes built had two or fewer bedrooms. While the proportion of newly built smaller homes—those under 1,800 square feet—has declined over the last 15 years, the percentage of larger houses has risen. New homes ranging between 3,000 and 3,999 square feet rose from 12% of new single-family homes built in 1999 to 22% in 2013; the percentage of homes over 4,000 square feet rose from 4% to 9% over the same period of time. Such homes are not affordable for middle-class buyers.
"There’s a lot of attention paid to the lower end—like true affordable housing from a design perspective and a development perspective—and likewise on the high end," Tate says. "But nobody is looking at the middle. In our town in particular, no one is willing to tackle a contemporary design in the speculative market." New Orleans is in a real estate boom with the highest prices since Hurricane Katrina hit in 2005 due in part to a short supply of houses on the market and an influx of buyers. According to a report from the Department of Housing and Urban Development, New Orleans's population increased an average of 3.6% annually from July 2006 to April 2010, and 85% of the growth was the result of net in-migration—people returning to the city after Katrina.
Design For The 50%
3106 St. Thomas is 975 square feet—significantly smaller than your average new house, but what it lacks in size it makes up for in design. A walkway and deck are built onto the building setbacks. While there's no backyard, there's enough room for a table and chairs behind the house and double doors open the back wall to form an indoor-outdoor living area. Tall ceilings and ample windows increase the feeling of spaciousness.
While the house's contemporary design stands out, the most important part of the project is where it’s located—an urban area. In New Orleans, like the rest of the country, there's been a major demographic shift where people are moving back into cities. But buying homes in major American cities is all but impossible: the most desirable and best cities for upward mobility and job growth are also the least affordable. Infill development is a clever way to create housing in places short of space. What's more, replacing vacant lots with middle-class families—who are presumably invested in making a neighborhood thrive—can potentially improve the area.
The 3106 St. Thomas parcel is very narrow—a compact lot measuring 16.5 by 55 feet. (The average lot size in the city is 50 feet by 120 feet.) With setbacks, the buildable area shrank to 10.5 by 45 feet, creating a footprint of 473 square feet—that's smaller than the average New York City one-bedroom apartment. Moreover, the lot is located in an historic district, which requires design review for any construction. These two factors make the land complicated to build upon and therefore undervalued from a price perspective. So Tate bought the land cheap, which enables him to lower the final cost of the residence for buyers. The heart of the Starter Home* program lies in identifying these potential sites deemed undesirable for most developers.
"It wasn’t just how well could you design a house—it was more comprehensive than that," Tate says. "It was looking for what the right pieces of the puzzle that had to be put together in order to find a solution. It’s not that architecture doesn’t make it better, but all the other little parts needed to work, too."
Building A Better Business Strategy
Before buying this property, Tate’s firm used GIS analysis to find vacant land in the city taking into account zoning ordinances, permitted uses, land sizes, and land values. They identified 5,000 properties in New Orleans that were ideal starter home lots—typically small in size and oddly shaped—and then narrowed the roster down from there. Part of Tate’s reasoning for infill development is to build closer to central business districts where there are established transportation and social networks and to play into the demographic shift in which people are moving downtown. They sleuthed for lots in neighborhoods that hadn’t become too expensive—but still had a strong enough housing market to where a new structure would be viable from a business standpoint.
Real estate speculation is a risky gamble—plus it has a nasty reputation for contributing to volatile boom-and-bust cycles and rampant gentrification. "If you’re working in the realm of market-driven development and trying to make it affordable sans subsidies, what you’re really doing is gaming the appraisal market," Tate says.
According to Tate, construction costs on average amounted to 60% of a new homes’ sales price in 2011 and that proportion has been in the ballpark since 1998. "In the end you’re working with three factors: it’s land cost, construction cost, and development cost, and you’re trying to drive all that down," Tate says. "Land costs are easy—make the land smaller, that’s where the small lots come from. Development costs come down with an integrated system and construction costs are being thoughtful about how you put the project together."
The team working on the starter homes is integrated: architect, developer, and contractor are all one unit, and they share the profit from the home's sale. What they're not trying to do is cut corners on construction to save on the bottom line, Tate says.
"What we’re pushing against is the problem with speculative housing—and housing in general—which is people build larger homes because that’s what markets well," Tate says. "Being blunt here, they keep costs low by using cheaper materials. We’re trying to invert that. Materially, it’s a small house, but it’s not a tiny house. The term used is 'right sizing'; we’re just trying to keep it as trim as we can. That money [saved on size] gets pushed back into finishes and quality details."
Tate is aiming to sell his houses based on the typical rate a first-time homebuyer pays, which he puts around $250,000 to $300,000 nationally, but would be readjusted based on a particular city. The inaugural project in his starter home concept hit the market at $339,000 (higher than the average listing price in New Orleans, which is around $305,000) but Tate expects economies of scale to lower the cost as he builds more properties. The target residents are people who are just entering the housing market or people who are looking to downsize.
A Model For American Cities?
The Starter Home* strategy could be applied to any city where infill development on vacant land is a possibility. In a paper detailing its research, Tate's office identified where these parcels are could be located—like on the cul de sacs of Bakersfield, buffer zones near Austin's creeks, Atlanta's alleyways, and underused parking lots in Burlington—along with the regional planning and zoning practices that gave rise to these vacant spaces. Because each parcel is shaped differently, the houses are all essentially custom—there's no one-size-fits all solution.
Currently, Tate and his team have between 15 and 20 projects in the pipeline and are setting their sights next on Oakland, California. The city has approached developers about infill development, which Tate heard about through a close colleague who is based in the area.
"Every city is a bit different, and what works [in New Orleans] doesn’t necessarily work out there," Tate says. "Oakland works well for this, I think, because of the condition of existing housing stock in the peripheral neighborhoods—wonderful old homes quickly being renovated and sold at prices not entirely accessible by our desired demographic—and also the increasing pressure from overheated surrounding markets, i.e., San Francisco."
Some individuals have also reached out to Tate directly expressing interest in commissioning a home that represents his philosophy.
"We’re pushing on basic conceptions on what spec housing is, what a starter home is, what a first-time homebuyer market is," Tate says, noting that they’re still very much in an investigative, proof-of-concept mindset and the program is not a business model—yet. "We see it as one big study in a way."
The Starter Home* concept hinges on individuals' value system. Do they prioritize a contemporary design, living in a city's core, and having access to the existing transportation and amenities that come with proximity to a central business district? Or do they prefer to pay a similar price to have more space on the exurbs of a city but with a generic design? If homebuyers think they're getting more bang for their buck, Tate's "study" could potentially become a lucrative business model after all, people migrating to cities could benefit from more diverse new housing stock, and neighborhoods could potentially benefit from having middle-class residents in previously undesirable places (just don't call it the "G" word).