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Still lost. Is "market rate" what you'd otherwise pay for housing? If so, you can still sell that housing 100% below market rate (but above what is needed for
by ergothus 10y ago
Still lost. Is "market rate" what you'd otherwise pay for housing? If so, you can still sell that housing 100% below market rate (but above what is needed for maintenance costs) and make a profit in a scarce housing situation. You'd absolutely be below what someone getting market rate would get (be it by 100% market rate or a 30% below, 70% above ratio), but it'd still be profitable.
Unless you mean that the cost of the land would be priced off of market rate, so the land cost alone would make this undoable. That makes sense.
- enf 10y agoYes, market rate is what you would pay for other comparable apartments. The sheer cost of land is a big part of the problem, but so are the fixed costs of construction. If you are taking advantage of the density bonus, you are probably also having to move from wood-over-concrete construction to steel framing, the base cost of which doesn't pay off until you have a much taller building to spread the cost over, which is probably taller than you can legally build even with the density bonus. There are probably opportunities to forgo profit by charging something at or above your costs but less than the market might bear, but the costs of building are still so high that it's hard to get below the threshold to count as affordable even if you aren't trying to make any money.