In Praise of Remodeling

Just a short note that I was reminded of recently when I came across a project in LA that proposes to convert a manager’s office into a one-bedroom apartment in an existing building: subdividing old housing is very good, but it has been curtailed by zoning.

Reconfiguring buildings that already exist is one of the cheapest ways to create new housing units. Unsurprisingly, it is one of the primary ways that affordable housing was created in the past. Single-family housing was converted into boarding houses. Once-fashionable homes on Bunker Hill in downtown LA became cheap apartments, providing many affordable housing units until they were demolished for urban renewal. Row houses that were single family became one apartment per floor, or several apartments per floor, or even single-room occupancy units.

Now, this wasn’t the only way affordable housing was built in the past. Many buildings were purposely built as market-rate affordable housing, from LA’s dingbats to New York’s tenements. But remodeling an existing building is likely going to be cheaper, for structural reasons you can’t really change. This includes:

  • The building already exists, so its capital construction cost has probably already been recovered, and the amount of construction needed is smaller.
  • Because you don’t have to demolish an entire building and start from the ground up, the units can be delivered more quickly, and the carrying cost is lower.
  • Because fewer resources and skills are needed to do this type of construction, more people can do it. This lets more people participate in development and makes it easier to finance.

All of this means that new units in existing buildings can be delivered at lower cost than new units in new buildings. That lets housing supply be more responsive to prices, making new units viable at lower rents.

Of course, all of this is intuitively obvious to a lot of people in crowded but disinvested neighborhoods. People don’t have to work out the theory to see that there are other people who need housing, and that they can provide it by remodeling space in a building they already have. That’s why there are so many unpermitted units all over Los Angeles, from garage apartments to unpermitted additions to illegal subdivisions of commercial structures.

And of course, rather than seeing this human ingenuity as a way to solve the housing shortage, we send out code enforcement to demolish these units when we have nowhere to tell the people who live there to go. It’s like making pushcart vending illegal and then telling people to go stand in an unemployment office line instead.

The City of LA’s Unpermitted Dwelling Unit (UDU) ordinance was a huge step forward in this regard, because it acknowledges that “these units add much-needed affordable housing to the City of Los Angeles.” The UDU ordinance allows a unit to be legalized, provided that they pass plan check and correct any building code deficiencies, and that one unit on the property is dedicated as an affordable unit for 55 years.

However, for political reasons, the UDU ordinance only allows this for units occupied prior to December 10, 2015. If you could build a new illegal unit and then legalize it through the UDU ordinance, this would create an incentive for people to start building more illegal units. But of course logically, if the units are providing “much-needed affordable housing” – housing that is so badly needed we are willing to legalize the ones that exist – the problem is not that people would build illegal units, it’s that the units people build would be illegal!

UDU ordinance aside, subdividing old housing into multiple apartments generally doesn’t fit into the modern conception of planning. Neighborhoods are planned to be built once and then never change, regardless of what social and economic conditions change around them. If you happen to own a single-family home in a multi-family zone, a very rare situation in LA these days, you could do this. But most places in coastal California are already built out to their maximum permitted density (or in many places, more than their permitted density due to downzoning).

It’s a shame, because upzoning would probably lead to not only an increase in new building construction, but to remodeling of existing buildings. By not allowing it, California is leaving some of the most affordable potential housing units on the table.

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