The SAB Center has scheduled 7 years Research & Development to value the cost of housing, compare with the market, define affordable housing with 7 different kinds of residences, define overpriced housing, develop economical tools and develop managerial methodologies. This R&D program is motivated by the state of housing in the United-States where poverty compared to cost-burdened housing leaves the United-States with ¾ of the country at risks of becoming homeless.
Proposition HHH in Los Angeles is participating in the construction of housing programs exclusively directed at homeless people. The report from the city shows that the average cost for one unit (for only one person) is $531,201. If we compare this cost per unit with the definition of “affordable housing”, we need to question how such programs are fulfilling their mission.
With the demonstration program, we want to understand why projects are overpriced, how they are overpriced, who decides to create this overpriced market, and how overpriced housing is being approved by cities, counties, states and federal programs.
One project particularly pulled the trigger on our motivations. This project called “Isla Intersections” is being built with used shipping containers, at the border of a spaghetti conjunction, where the land has little value. The project consists of 54 one-bedroom units for “permanent supportive housing complex for homeless Angelenos”. Total cost of the project is $34 million and the cost / unit is $ 629,629. Additional to the cost of the construction, the city of Los Angeles will have to support the monthly cost of vouchers ($1070/month/individual) and since the program consists of “permanent housing”, the total cost is $693,360/year for only 54 tenants.
In comparison, a house in Chatsworth, 3,005 sq. ft, 4 bedrooms, 3 baths is estimated $460,000 on Realtor. The same house has a pool and total size of 8,997 sq.ft.
In comparison also, one container studio is sold $37,995 ($33,995 on sale) on the internet. Total cost for 3 containers would be $113,985 for 960 sq.ft.
When the cost of the real market is lower than “affordable housing”, something must scientifically explain the reasons.
To continue reading, you must subscribe to our Blog for Investors. The subscription is free, and it provides a full access to our online library. By subscribing our blog, you are enrolled into our mailing list to receive our newsletter on “Blog for Investors”. For any other newsletter, you can subscribe here.
- Introduction (SAB Center)
- Building value on housing (SAB Center)
- Industrial vigor (SAB Center)
- Research and Development program (SAB Center)
- ISO 26000 on Social responsibility (SAB Center)
- Financial projections 2020-2027 (Domaine des Crafts)
- Affordable housing in Los Angeles (SAB Center)
- The importance and the role of the Joint Venture Capital LLC (SAB Center)