Podcast Summary: Upzoned - Episode: The Goldilocks Option: Why Townhouses Might Be Just Right for Housing Development
Podcast Information
- Title: Upzoned
- Host/Author: Strong Towns
- Description: Join Abby Newsham, Chuck Marohn, and occasional surprise guests to discuss in-depth one significant story from the week related to Strong Towns' conversations.
- Episode: The Goldilocks Option: Why Townhouses Might Be Just Right for Housing Development
- Release Date: November 20, 2024
1. Introduction
Abby Newsham, the host and a planner in Kansas City, opens the episode by welcoming Andrew Ganal, the managing partner at AND Real Estate, a company specializing in urban infill housing development. Abby introduces the episode's focus on townhouses as a viable housing development option.
2. Guest Background: Andrew Ganal [00:04 - 02:08]
Andrew shares his professional journey, highlighting his transition from public policy and economics to real estate development. He discusses his experience working at the Department of Treasury during the 2008 financial crash and his role in initiating the TARP program. This background in public service and understanding of economic trade-offs laid the foundation for his shift to entrepreneurial ventures in real estate.
Notable Quote:
"Development is much more like, okay, I work hard on a project, I get it built, and there it is. I can go touch it, feel it, interact with the people who live there and manage it."
– Andrew Ganal [04:30]
3. Townhomes as the New American Dream [08:19 - 10:59]
The conversation shifts to the Washington Post article titled "The New American Dream Should Be a Townhouse" by Amanda Shindrunk and Heather Long. They discuss how townhouses serve as the "Goldilocks option" between single-family homes and high-rise condos, falling under the "missing middle" housing category.
Andrew reflects personally on the appeal of townhomes, emphasizing their balance between space and community amenities. He contrasts his experiences in single-family dominated areas like Orange County, California, with the potentials townhomes offer in more walkable, urban settings.
Notable Quote:
"Townhouses are the Goldilocks option between single family homes in the suburbs and high rise condos in the city."
– Abby Newsham [08:19]
4. Affordability and Construction Challenges [10:59 - 16:12]
Andrew discusses the relative affordability of townhomes compared to single-family homes, especially in urban infill areas. He acknowledges the challenges posed by rising construction costs but argues that townhomes offer a more cost-effective alternative by maximizing land use and sharing construction resources.
The conversation touches on the current U.S. housing shortfall of 3 to 7 million homes and the recent boom in townhouse development, where nearly 20% of new homes under construction are townhouses.
Notable Quote:
"Affordability to me is always going to be a relative measure because we're still talking about... it's going to be expensive to build and it's going to be expensive to buy. But relative to... it's going to be more affordable than an equivalent single family home."
– Andrew Ganal [14:38]
5. Zoning and Permitting in Kansas City [16:33 - 21:20]
Andrew elaborates on the zoning challenges faced while developing townhomes in Kansas City, a market traditionally dominated by single-family homes and small apartments. He explains negotiations with the city over alley widths and the replacement of outdated infrastructure like water mains, which significantly impacted project costs and planning.
The discussion highlights the need for supportive zoning regulations to facilitate the development of townhomes and the inefficiencies caused by cities pushing infrastructure costs onto developers.
Notable Quote:
"We're making more efficient use of that public infrastructure by putting more homes and more property tax dollars on that same length of infrastructure."
– Andrew Ganal [20:44]
6. Innovative Project: Townhomes and Apartments on an Odd Lot [26:35 - 29:49]
Andrew describes a specific project in Kansas City involving the development of townhomes on a large triangular lot. To optimize space, the team integrated small-scale apartments alongside the townhomes, creating a mixed-use development that includes both for-sale and for-rent units. This approach aimed to meet diverse housing needs within the neighborhood.
The project faced complexities related to planning individual parcels, managing common areas, and coordinating with the city for infrastructure upgrades. Despite these challenges, the project exemplifies innovative land use in urban infill developments.
Notable Quote:
"Our goal... was to try and keep an HOA fee as low as possible while still showing that, okay, there are these things that are collectively in the collective interest here."
– Andrew Ganal [36:33]
7. Associations: Condo vs. Homeowners Associations [33:55 - 37:17]
The discussion delves into the differences between condominium associations and homeowners associations (HOAs). Andrew explains that while condos typically involve shared land ownership and higher association budgets due to extensive shared infrastructure, townhome HOAs allow individual ownership of land beneath the homes. This structure enables more manageable and lower HOA fees while maintaining shared responsibilities for common areas.
Notable Quote:
"Condominium association probably generally has a higher budget just because it's got more things to fall underneath this purview. And our goal... was to try and keep an HOA fee as low as possible."
– Andrew Ganal [34:45]
8. Financing Complexities in Mixed-Use Development [29:49 - 32:17]
Andrew discusses the financial intricacies of developing a project with both for-sale townhomes and for-rent apartments. Lenders typically prefer separate loans for different types of housing models due to varying risk profiles. The team worked with a community bank to create a financing structure that leveraged proceeds from townhouse sales to pay off construction loans, allowing the apartments to be owned and managed independently thereafter.
This mixed-use approach required innovative financing solutions but ultimately provided a balanced risk distribution and potential for sustained returns through rental income.
Notable Quote:
"It's trying to spread out your risk amongst multiple different product streams."
– Andrew Ganal [32:17]
9. Market Demographics and Target Audience [22:49 - 25:06]
The target market for the townhomes includes dual-income couples, empty nesters looking to downsize, and individuals relocating from more expensive regions seeking affordable urban living. Andrew emphasizes that while their townhomes may be priced higher than other Kansas City offerings, they present a competitive option for those moving from pricier markets like Los Angeles or Boston due to their location and amenities.
Notable Quote:
"Our townhomes... while still relatively expensive for Kansas City, if you're moving from Los Angeles or Boston or something similar, it looks like actually a pretty good deal."
– Andrew Ganal [25:06]
10. Conclusion and Future Outlook [37:17 - 40:10]
Abby and Andrew conclude by expressing optimism about the role of townhomes in transforming housing landscapes. Andrew hopes that their project will inspire more developments in Kansas City and beyond, advocating for townhomes as a flexible and community-friendly housing option. Abby echoes this sentiment, highlighting the aesthetic and functional versatility of townhomes in various urban and suburban contexts.
Notable Quote:
"I think a lot of cities are going to see the value in whether it's like it doesn't have to be in an infill area, per se... but kind of works wherever people want to live."
– Andrew Ganal [37:54]
Final Thoughts: This episode of Upzoned provides an insightful exploration into the potential of townhouses as a balanced housing solution addressing affordability, urban density, and community cohesion. Andrew Ganal's expertise and experiences shed light on the practical challenges and innovative strategies in developing townhome communities, particularly in markets like Kansas City that are ripe for such transformation.
For those interested in exploring townhouse development or seeking more information, Andrew Ganal can be reached through AND Real Estate’s website at andewndkc.com or via email at andrew@andrewndkc.com.