John Bitely: Lots and lots of little things over the years that have been stacked on top of themselves. It's like bricks and all of sudden now it is the Empire State Building. We've stacked them so high that this pile has become literally over $100,000 in government regulation for every new house that's being built. And it's a lot of, shall we say, stupid money that's being wasted at a time when affordability for new housing is not happening. You know, what's one brick in a wheelbarrow, but all of a when you put a whole pallet of bricks on a wheelbarrow, it crushes it.
So as a primary example that I can give you, and I'm speaking with 30 years of owning my own company in the building world, the township where I live and going on third, fourth generation in that township. Starting in this industry, we had one-acre minimums across the whole township for a house. Well, now at this point in time, there's a very small section that's still one-acre minimums, but that's pretty much all built out in this township and the rest of its two-acre minimums. There are no requirements for wells or septics that require more than an acre.
It is strictly, was the thing that happened over time, mostly because people wanted to slow down the growth. They thought that if they made bigger lots, it made it more expensive, and so, which it does, and that that would stop people from living here. Overtime, what it's done, it's used up a lot of extra land as there's less and less land available. It just kills the affordability.
Pretty simple math that if a lot will sell for $100,000, which is not uncommon in this township. To the consumer, if they could buy a one-acre lot for $80,000, they would think it was a deal rather than paying $100,000 or $120,000 for two acres that they don't even need, but it's required. Didn't like that answer. The people that need houses don't live there, don't get to vote. And those that live there and already have a house don't care.
That's just one item on density and lots. You know, there's other things going on such as ADUs and small houses and tiny homes. And a lot of people roll their nose at them. Oh, they're just going to be cheap houses. It's all, it's going to cause all these problems, but it's been proven that nice communities with those intermixed or even communities of them that it works out nicely.
You can build one of these for your mother-in-law or your son or daughter to live outside of your home on the back of your lot for $125,000. Well, that's a whole lot more affordable than $400,000 home with property and it's a way to help solve these issues. But there's very few communities that are allowing them.
Dee Morrison: When we're talking about zoning, obviously happening at the local level, what would you like to see here?
John Bitely: Part of it is that those that are in charge in our local communities need to have more compassion for people that are not necessarily like them. And I'm not necessarily pushing the race button or anything like that, but it has more to do with the haves and the have nots, or the young and upcoming haves that just don't have it yet.
I proposed a development in a community about 10 years ago. And at that time, that community's average home sale price was less than $200,000. We were proposing a community of new homes that would have been, even then it would have been $300,000 for a home. And I had literally one of the elected board members state in a meeting that if it wasn't $500,000 homes, they didn't want them. And their average price was less than $200,000 at that time. That's very unrealistic expectations for a community. They managed to stop that with all their red tape and rigamarole and different things that took place. And now that same community has nice new schools and the school district is going, we're in trouble because we don't have enough students to fill all these rooms and desks that they have and their funding comes by pupil, not by the tax dollars. So, if there's no kid to sit in that desk, they don't get to pay the teachers and support the school. That's the short-sightedness that's going on with these communities that don't want development.
So back to your question of what do I want to see happen? I'd like to see our local governments behave themselves better and if they don't, how could we make them accountable? Our current system, the only way to make them accountable is to recall them or don't reelect them. There's just no other accountability.
The challenges come in as the state has said, look, if the locals aren't going to let these things happen, we'll take control. Well, there's a big pushback that we like local control because we don't necessarily trust big brother either. And we end up in a round room with no corners and everybody's just running round and round and we're not getting any answers and the problem is just continuing to magnify.
Dee Morrison: So, we need a shift in mindset in local leadership when it comes to development, affordable housing.
John Bitely: Let's be honest, when somebody hears affordable housing, what's the first thing they think of? Most of the time they think of government subsidies, they think of crime, they think of challenging situations. Affordable housing technically is described as if you spend more than 30% of your income for housing, it's not affordable to you. So, when we start talking about these $400,000 homes, people have to have an income, somewhere in the $150,000 to $200,000 range to afford these.
Dee Morrison: If we're looking at, say, a teacher or a nurse, a young family, they're looking for a starter home in our area right now, what are their realistic options?
John Bitely: That's why the rental market is so high because those people are being forced to rent because they cannot find livable homes in the 30% of their income price range. A number of things have happened over the years. We do not have enough starter-level homes, which would be usually a smaller home. So as the example in my career, we build a lot of homes. that were designed to be reasonable to buy to begin with and then you could expand them by finishing lower levels and so on. And they started out as a two-bedroom, one bath home. We sold a lot of them for $119,000 in the day on one acre or less lots. And now I can't even get a one-acre lot to build them on. But even if we do, most people build them as three and four bedrooms and they're $300,000 or $350,000.
Well, that's very tough for a young professional nurse with even if they have only a small amount of college debt and they still might be making $80,000, but it doesn't fit into their budget. They just can't swing that 30%. You know, we need to have ways to build them homes in the $200,000, $250,000 price range. And the communities need to recognize it's not going to hurt their house values. It's not going to bring troublemakers. It’s just a place for our young professionals and young people to get started in life.
Number one is they have to look at their own community, whether it's a township or a village or city, and take a look at their planning commission and their board and what the rules are and what they're doing about it. There is a number of communities that are trying to do things and there are moving to offering methodologies for small homes or ADUs where you add a home behind, but there's also a lot of communities that want nothing to do with it. There's a number of communities that are doing things to block higher densities. Some of them are just flat admitting that they only want to be a community for the elite.
Dee Morrison: Is there anything that you would suggest you could see state or federally that would have a positive impact on the affordable housing issue?
John Bitely: Our society has to decide. It's easy to give lip service to affordable houses, but nobody's making the tough decisions to allow them to happen. And so far, they continue to be blocked.
There's even things such as our codes, you know, the way we build houses, the requirements. You know, an example is every so often we hear about, well, everybody should have a fire suppression or sprinkling in their new home. And it adds literally thousands of dollars and especially if you have a well versus public water and some of the hidden costs to go with it. You know, it's safety and it's a concern, but there's never anything on it about existing homeowners having to add sprinkling to their house to make them safe. And everybody would be ticked off beyond belief if every homeowner was mandated to install new sprinkling in their house, but they're okay with requiring it on new homes and making them so unaffordable that nobody can afford to buy them. It's easy to say it's only a few hundred dollars but look at the ripple effect it causes. And I go back to the brick scenario, you can put one or two bricks in a wheelbarrow and still make it move. When you put a whole skid or pallet of bricks on that wheelbarrow, it crushes it. And that's where we're at with all these regulations and codes. We've added so many bricks to that wheelbarrow. Nobody can move it. Matter of fact, it's got a flat tire and it's stuck and we've got to unload that wheelbarrow.
Dee Morrison: Thank you, John Bitely, president at Sable Homes and Sable Developing.