This past April, I had the privilege of attending the 2023 Housing Innovation Summit in Denver, Colorado – hosted by the good folks at the Housing Innovation Alliance. This Alliance is a group of professionals from all over who are dedicated to advancing the homebuilding industry by highlighting and teaching innovative building techniques and practices.
The Summit was chock full of innovation. As each day came to a close, I couldn’t help but be excited and inspired. If you get the chance to attend the Summit (and/or join as a member of the Alliance), take it!
One day, attendees had the opportunity to visit innovative housing projects in the area. It was really great to get “boots on the ground” (even though I was wearing casual business shoes) and see “real stuff” happening.
And that’s where I was able to visit the site that is being pursued by Urban Cottages.
Just What Are Urban Cottages?
The question really should be “Who is Urban Cottages?” – since Urban Cottages is a legal entity of that name. But, since I’m a bit of a grammar nerd, I couldn’t bring myself to mix the singular verb (“is”) with a plural name (“Urban Cottages”).
Putting my weird grammar nerd-ness aside, let me explain my understanding of the entity – and – what they are pursuing.
Urban Cottages was formed by 3 individuals (Jeff Handlin, Chase Stillman, and Todd Johnson) who are attempting to meet the needs of folks looking to buy a new home in Denver, Colorado – a city that (like many others around the country) has very expensive housing. So expensive, in fact, that many people who want/need to live in the city (to work at nearby universities, medical facilities, etc.) simply……can’t.
The Team is dedicated to finding ways to re-think the “typical” infill construction business model that most Home Builders follow (and/or NEED to follow).
What Is The “Typical” Infill Construction Business Model?
The “typical” Infill Construction Business Model is as follows:
- Home Builder buys an infill house or lot in existing neighborhood.
- Home Builder looks at local Zoning to see what is allowed to be built.
- Home Builder tears down existing infill house and builds what is allowed by that local zoning.
- Home Builder lists and sells new House to new Home Buyer.
“OK,” you may be thinking. “What’s wrong with that?”
And – on the surface – nothing, really. After all, we all know that it’s often about the money. You need to turn that money as quickly as possible and maximize your Return on Investment. And time is money, right? Buy, Build, and Sell as quickly as possible.
What is Urban Cottages Doing Differently?
Here’s a lot that started with one house but has two additional houses proposed at the rear.
Why Are They Doing This?
I don’t blame you for asking why a Company would want to do this. I mean – they are fighting an uphill battle by trying to get the city of Denver to think about zoning differently. It’s tough to move a boulder that’s been in place for a long time (Colorado pun not really intended – but – it’s kind of funny after I wrote that line).
Let me list a few reasons why most Home Builders would not want to do this:
- Easier/Quicker: As mentioned above, it’s just easier (and quicker) to tear down an existing house and rebuild what fits with zoning. And we all know that “time is money.”
- “It’s How We’ve Always Done It!”: Home Builders are used to getting to a buildable lot and erecting the new home. Easy peasy! Why mess with that?
- Sales Price Appreciation: Typically, Home Builders look at their current products and know that they have Homebuyers lined up who will likely pay big dollars for a home within walking distance of many city amenities.
- Lower Resistance by Neighbors: Replacing one house with another house seems “fair” to those in the existing neighborhood. “Besides,” a Home Builder says, “the house I’m going to build is higher in value than the existing homes on that street. So I’m going to increase the neighbors’ house values. They should LOVE this!”
The folks at Urban Cottages, though have a few other thoughts on these same issues (at least as I see it). They may chime in and set me straight if I’m wrong. Let’s explore the same reasons mentioned above with what I believe is their take on the same reasons:
Easier/Quicker
Sure. It’s easier and quicker to go with the flow and not “fight City Hall.” But they recognize that the current zoning in most locations has evolved into a system that really has added to the problems with new home pricing – making it affordable only to those who make a high income (or to those who fall into a category where they get assistance from the government for their housing).
This is the essence of the problem with housing affordability – best explained in the book Missing Middle Housing by Daniel Parolek – a book that I’ve been devouring lately. Daniel deftly explains the difference between “affordable housing” and “attainable housing” in that book.
So, the folks at Urban Cottage decided to play the long game for a larger purpose. Yes, it’s easier to just keep adding to what they recognize as a problem with our housing – instead of taking a stand to say “Let’s fix this!” They’re taking that stand!
“It’s How We’ve Always Done It!”
Excuse me if I shudder a bit when I hear that. We’ve all heard that those are the words that hurt a business more than any other. See my sentence above that last header about playing the long game for a larger purpose. Yeah. It’s an expensive game to play – but – read on for why it just might be worth it (in the eyes of Urban Cottages).
Sales Price Appreciation
If you have Buyers lining up to pay you top dollar for housing, you may think that this is a big reason for going with the status quo, but this is one of the big reasons that Urban Cottages is pursuing this new type of zoning. They recognize that the current zoning leads Home Builders to just maximize the price of the house on the lot – and – that’s pricing a lot of people out of the market.
The neighborhoods in urban areas like Denver – with houses built long ago – have traditionally been housing people who are filling roles at colleges, key healthcare companies (hospitals, etc.), law enforcement, etc. Those same people are working at wages that are often not as high as other industries. And they need to live somewhere that’s convenient and affordable to their job (ahem – this IS the “middle” of the Missing Middle Housing mentioned above).
By placing a million dollar house into a neighborhood of homes that are typically selling for one quarter to one half of that price means that the “typical” buyer in that neighborhood can’t be a buyer of that house. And, over time, as properties on that street (and others nearby) get sold, others follow the trend. In time, those buyers continue to be pushed out of the area.
Can you see the problem with that? It’s bigger than each individual house (and the profits that come with that one house). It’s a systemic issue that just grows out of control over time.
Lower Resistance By Neighbors
If the neighbors’ property values are going up (per the argument often made by Home Builders), shouldn’t they be happy?
Perhaps. But the folks at Urban Cottages make the argument that the houses being replaced are so grossly out of proportion (and sales price) to the neighborhood that they become a detriment to that neighborhood. Houses built by today’s typical standards are larger in scale and stick out enough to just mess up the “neighborhood vibe.”
Instead, Urban Cottages wants to get this zoning for more houses on one lot approved to maintain that “neighborhood vibe” – and – continue to offer MORE housing that those same workers can afford in that neighborhood.
When possible, they keep and remodel the existing house (instead of tearing it down). Then, they look to add more housing on the same lot by subdividing the single lot into smaller lots. This way, they can build homes that stay within the same scale/size of the existing houses on that street – and – create a sense of “community” that people often complain is missing.
“Hold the phone,” opponents may shout! “This is just trying to cram more housing in to line your pockets! You’re turning these folks into sardines!”
I admit. I kind of thought the same thing to myself while looking at the lot on the site visit during that Housing Innovation Summit. I wondered what the neighbors thought about this concept. I wondered if the principals at Urban Cottages had to come-and-go secretly for fear of having rotten tomatoes hurled at them by neighbors.
And – I got my answer! Keep reading to learn how that happened.
What Do The Neighbors Think About This?
A large group of attendees to the Housing Innovation Summit (myself included) took the field trip to one of the Denver sites where Urban Cottages is attempting to get this new zoning approved. We were all on a big bus squeezing down this narrow street of houses (kudos to that bus driver for navigating this small street with parked cars, etc.).
We stood on the sidewalk in front of this small lot that had one house on it right now. A printed full-color sign showing the proposed plan for four houses on this same lot hung on the fence to one side. The sign showed that the existing house was to stay. One house would be added to the left (now grass). Two more houses would be added behind these two on the main street (with access to the alley behind them).
That’s a lot of building proposed for this one lot, and I had to think of the logistics for building all of this on a small footprint. Challenging? Sure. But we’re home builders – and – we’re used to figuring out how to overcome challenges on lots like this.
The principals of Urban Cottages enthusiastically explained their concept. They pointed across the street to show one of those properties where the old house was torn down and replaced by a house that was out of line in terms of both scale AND price for that neighborhood.
All the questions that I mentioned above were floating around in my head. Primarily, I thought about the neighbors and their thoughts.
And that’s when it happened!
A lady in the crowd started asking questions. She prefaced her question with the statement, “I don’t know a lot about housing, but….” That statement didn’t make sense to me at first. I mean we were all bussed to this location from a housing conference. But, as she continued, I came to realize that she wasn’t bussed in with us. She was one of the neighbors who happened to walk in on the activity buzzing in front of that house.
And she asked some really good questions from a neighbor’s perspective. And each question she asked were addressed by Urban Cottages. When the exchange was done, she was very satisfied with their answers and their approach to development. In the end, I think she was even happy to see that someone was trying to think about that missing middle housing. No hostility or pessimism from her at all.
OK. I’m aware that this is just ONE instance. And maybe the “haters” stayed away. But it showed me there is real promise for this type of zoning that doesn’t have to be viewed as “cramming as much as you can into a small footprint.”
It intrigued me enough to start diving into this a bit more. I’d love to hear what your thoughts are on this in the comments below. I’m happy to dive into more aspects of this concept in zoning and watch as it unfolds. Let me know!
