The Berkman & Affordability

I have heard the claim that infill housing is only luxury and it eliminates affordable housing. This ignores a number of infill affordable housing projects we have done. Even “luxury” buildings like The Berkman typically offer more affordable options than the surrounding neighborhood. That said I am a believer of studying actual data, so I took a look.

Some people have an artificially low expectation of what it costs to buy a home on 15th Ave SW in the Folwell Neighborhood. Using Zillow data for the past 3 years the average sale price of a home along 15th Ave SW from 2nd street to 6th street is about $360,000. I can’t speak to how much of this might be speculation, however at $175 per square foot this is not too dissimilar from other desirable areas. Even factoring in record low interest rates the cost of home ownership here is quite high. The cost housing in a $360k home in this are works out to be about $2,067 per month. This includes building insurance and taxes, but excludes PMI, maintenance, and the difference in utilities which is likely to be much higher.

Let’s compare that to The Berkman. There are some very expensive units at the Berkman. However, there are more than 50 units for less than $1800 available today. Units start at about $1200 monthly. For perspective a unit renting at $1200 monthly is roughly affordable to a household earning $48k annually. The fact that maintenance, utility, and transportation costs CAN be close to $0 would allow this number to go down to the $30-$35k range, but lets be honest, most people in that range will choose to go elsewhere. These are not poor people by any means, however that median household income in Olmsted County is over $70k. The creation of the Berkman eliminated only 5 single family homes in total and they weren’t “affordable.”

There might have been a time where these homes near an enormous employment center were affordable, but those days have passed. In addition to the other benefits the community negotiated as part of the project, the Berkman has made the neighborhood more affordable & more accessible. In a time where there is surging need for senior housing, and amenity rich, transit oriented building like this becomes a viable option at a much lower cost.

I have heard a number of comments about why renters are inferior to home owners, and it makes me sad. I came to Rochester as a renter and there is a high likelihood when my kids are grown I may rent again by choice. Many of the comments I have heard reflect “classism” and some of them have gone so far as being racist. I do not believe that people who need or choose to rent are “transients” or any less worthy of a neighborhood than homeowner.

One comment

  1. Not sure if I’m missing your point here Mike? How is comparing a $360,000 4-5 bedroom house to a ZERO bedroom 500 square foot studio apartment supporting data for affordability?

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