Observations and Unsolicited Opinions on Alexandria’s Housing Problem
Recently, the Town Talk reported that Central Louisiana’s real estate market is outperforming national trends by a significant margin. Although new high-end residential construction is definitely a growth sector in Central Louisiana, I disagree with the contention that our real estate market is healthy and stable, particularly Alexandria’s market. Indeed, the reason that our real estate market appears to be so strong is because affordable housing is simply too expensive to construct. The proliferation of high-end developments, while exciting, actually belies a major problem: the lack of affordable housing in our community.
During the mayoral election, several community activists expressed support for a plan of in-fill revitalization; that is, encouraging investors and developers to tackle large-scale renovation projects on homes located in blighted areas– as a way of solving the affordable housing problem. It’s a good idea, and we definitely have a problem.
The median household income in Alexandria is a little more than half of the national average, which means that the average family in Alexandria cannot afford the average home. An affordable home in Alexandria is actually priced and valued correctly; the problem is that it is still prohibitively expensive for the average family.
The average family in Alexandria, based on the federal government’s definition of affordable housing, should be able to afford a home priced between $80,000- $110,000. Unfortunately, there is a significant dearth of homes in this price range in our real estate market. During the past twelve months (according to our local MLS), only 48 three bedroom, 1,500-square foot homes sold in Alexandria; that is an average of four homes per month, a staggeringly low number when one considers the number of people who have moved into Alexandria during the past twelve months. And this just scratches at the surface. We’re only looking at the “average” family. Consider the fact that approximately 40% of people in the Alexandria region live from 50% to 150% below the poverty line. This precludes them from even considering buying a home.
If Alexandria’s growth follows the current trend, new neighborhoods will only include high-end housing. It’s simply too expensive for builders to justify affordable housing construction, unless it’s subsidized by the government. This will create stratification and segregation. The average taxpayer will be paying for new infrastructure for subdivisions they will never be able to enjoy.
While I understand that in-fill redevelopment is essential at solving a short-term problem (with the added benefit of improving blighted neighborhoods), we must be thinking ahead. We must envision what Alexandria will look like in twenty years, as we expand and as certain areas of town become developed due to added infrastructure.
We must ensure that our growth is not lopsided, that it incorporates a mix of developments, and that it encourages affordable housing. Currently, I believe Alexandria may be over-saturating itself with high-end developments, and as a result of this over-saturation, we may be over-extending ourselves as well.
CenLamar 
Lamar this is the problem with people who only look to the MLS system as their sole source of real estate information. Much like those who believe a certain REALTOR with his own radio show knows everything happening in the City.
To begin – there are 3 new developments either in final planning stages or under construction at this moment utilizing the Louisiana Housing Financy Agency’s Lease-to-Own program. These developments will provide over 160 homes for low-to-moderate income families to lease for a short period and then purchase at below market cost because of the partnership between the City, the developer and LHFA. Yes, I know this means they are being publicly subsidized.
Additionally, two private developers have been working to build homes in the price range of 100-150,000 after it was made clear once Union Tank was announced there was an extreme shortage of homes in that price range. The reason these homes are reaching the higher end of the range is because of the increase in construction materials and labor in a post-Katrina Louisiana. Something which will not return to normal for several years. Since you have family members who are developers, I am certain they can explain these economics to you first hand.
In-fill will address some of the problem, but what people speaking to this don’t understand is this: there are not large tracts – by this I mean 1-4 acres even – available within the existing municipal boundaries to even begin small scale developments. I for one would prefer we don’t look to high density as a means to address affordable housing, which is what many cities have done when considering in-fill.
High density solutions for affordable housing lead to greater problems. This is why every major metropolitan area is now destroying their high density affordable housing options and developing mixed income and mixed use neighborhoods as a replacement.
One solution lies with adjudicated property. Here we can bundle lots in neighborhoods and target areas for revitalization. It is easier to work with non-profits when you’re talking about selling property that has been taken by the City for taxes, but it can be sold to private developers as well. These properties lie within neighborhoods all over the city.
As far as taxpayers paying for infrastructure they will never get to enjoy consider this – the City does pay for gas to be installed in all new subdivisions. They put the electrical in, but do not pay for it. They accept the water and sewer system. NOW, since the City receives all of the income from these utilities, the benefits back to the City outway the costs. Additionally, the City receives property taxes on these new homes, adding to the funding to operate the City and offer additional services to its citizens. In the end, you might say this balances out.
In regards to oversaturation of one price range over another consider this: when developers can no longer sell the homes they are building, they will stop building them. I am still amazed to to see the number of subdivisions either in expansion or just now under construction with the average selling price of a home being over $300,000 in our market. This tells me we have been recruiting more higher paying jobs and that, just our historical incomes levels show, we are increasing the average income per capita and growing the number of persons who can afford the price tag on those homes. While we have been increasing those numbers, the numbers on the lower end of income scale have been dropping. Our median income continues to rise and is outpacing every area of the state, except one. I for one do not believe we are at the point yet where we need to consider development codes mandating a certain amount of each new development – for example 10% which is used in Conn, NJ and some other northeast coast areas – for affordable housing. The way these mandates work is that 10% of the total new homes planned, must be eligible for purchase by a family making the median income for that area. What this has done is started to allow for upward mobility by hardworking people, providing the same educational opportunities, but more importantly growing people out of the slum areas of those major cities, thus providing for revitalization of those areas. We’re not there yet and I truly don’t see us heading that way.
Thank you for your thoughtful and insightful post. I can assure you that I am not simply relying on MLS reports to paint the picture of our housing problem and that I am aware of the new affordable housing developments throughout the city.
Certainly, you are also correct in stating that once the high-end market dries up, developers and builders will respond to market demands. This does not mean, however, that certain areas of our city won’t become over-saturated with high-end developments.
I think we actually agree on some basic points: I contend that we must look toward mixed-income and mixed-use developments to prevent stratification in new areas of town, and I understand that the lack of undeveloped land within the city limits means that in-fill development must be on a house-by-house or case-by-case level (Unless, of course, we make the mistake other cities have and increase residential densities in historic neighborhoods. I’d hate to see that).
You have made some excellent points, and I believe that we probably agree with one another for the most part.
However, 160 new homes, while significant and noteworthy (I should have included this in the original post), I believe represents only a fraction of the demand for affordable housing. In other words, we’re moving in the right direction, but we’ll need to continue encouraging these types of lease-to-own developments. We’ll also need to encourage new mixed-income developments, which can qualify for federal incentive programs.
Lamar.
Are your stats from the city of Alexandria, or are you looking at the whole metropolitan area?
While I haven’t looked at the stats in a while, it was long an article of faith that you could get more for your money north of the river than in Alexandria. I know that when my wife and I were looking for housing two years ago, there were more open listings in the Pineville/Tioga area than in Alexandria in our price range.
The MLS stats are only based on the Alexandria market– as are the stats on median household income. However, the stats concerning poverty are culled from data that includes all of the Alexandria metropolitan area.
Lamar,
Please help! I’ve been trying to defend the honor of FastTrack and the Versailles Ext. over on Antics but I’m afraid they are about to come burn me out.
I will confess my transgression: I asked them to make a decision based in fact not inuendo, supposition, or assumption.
Anon 6:49,
I’ve been following the Versailles conversation over there on Antics, but I’m not sure what to contribute. I think Versailles Extension is necessary, but I think it’s healthy for us to continually question the project– because if it is to be a major “new” part of town, we should ensure that the growth is inclusive– and that it does not merely benefit a small group of people.
There are also some questions about how Versailles will interact with Jackson Street– how one will make a left onto Jackson from Versailles.