Cincinnati and Dayton are adding more housing. Is it the right type?
Southwest Ohio and Northern Kentucky are getting bigger, expected to grow by more than a half-million people in the next twenty-five years, according to the State of the Region 2023 report.
In the midst of this we face a crisis of unaffordability. The State of the Nation’s Housing 2024 report says home prices have reached an all-time high. Prices are 47-percent more than they were in early 2020. For renters, the number of people paying more than 30-percent of their income has also hit an all-time high nationally. That’s when a renter is considered cost burdened. For Cincinnati it’s 43-percent and for Dayton it’s 50-percent.
There’s no question building more single-family homes, middle housing and large apartments would help.
But which types of housing are the most affordable, most efficient to build and most impactful? And how can cities help scale it up?
Cincinnati is leaning into more density with middle housing, especially along transit routes, with the passage of Connected Communities. While Dayton wants to create more housing of all types and preserve what it already has.
Brick by Brick looks at three types: single-family, middle housing and large-scale apartments.
Single-Family
Optimism is growing for increased construction of single-family homes going into 2025, according to the real estate company CoStar.
This is in part due to the Federal Reserve cutting its benchmark interest rate by a half a percentage point to between 4.75 and 5-percent.
Reuters reports single-family homebuilding surged nationwide to a five-month high in September.
“Increasing the supply of homes is key to alleviating affordability concerns for potential buyers,” says National Association of Home Builders Chairman Carl Harris.
But many people may not be able to afford these new single-family homes.
What happened to the starter home?
The New York Times reports, “Nationwide, the small, detached house has all but vanished from new construction. Only about 8-percent of new single-family homes today are 1,400 square feet or less. According to CoreLogic, nearly 70 percent of new houses in the 1940s were that small.”
Developer and former Home Builders Association of Greater Cincinnati President TJ Ackerman told Brick by Brick the lack of new affordable starter homes is due to several factors, like the cost to build, the cost of land and the limits of zoning.
On the materials side, while lumber prices may have stabilized again, costs for other things like drywall and cement, which started increasing even before the pandemic, have not really come back down.
Add to that the cost to get through the approval process, and for builders to borrow from banks, just like homebuyers, is making the numbers harder to work out. In whole, it makes the proposition to build and sell affordably, not very affordable.
Today’s version of the starter home is more expensive and farther out.
One example is Harvest Meadows, a 400-home development in Batavia built by Fischer Homes, where houses start at $280,000. Some developers find it difficult to build in some parts of the Tri-State, but not in Clermont County, according to the Cincinnati Business Courier who talked to them.
Red tape and a possible solution
Current president of the local Home Builders Association and private developer Greg Berling says there are different types of red tape, and the amount of it depends on which district you’re building in.
He says, “It takes a little bit longer in the city of Cincinnati to get things through. They have streamlined things, they’ve done their best, but you’re dealing with multiple agencies. You’re also dealing with the development department, the building department, and they’re all separate departments of the city that you’re having to wade through.”
To make it easier for developers to understand how zoning works for the area they are trying to develop, Hamilton County’s Director of Planning and Development James Noyes, along with the County Regional Planning Commission, have created a model zoning code that districts can use if they’d like.
While only a handful of counties have signed on to the model zoning code just yet, Noyes is hopeful more will adopt the format.
In addition, Noyes’ team is also planning to shift all permit filings with the county office to a digital system early next year, which should save the community and developers time, and therefore money in the application process.
Removing blight is a big part of Dayton’s plan
Dayton faces a need for more quality and deeply affordable housing. Following a multi-year housing needs assessment, Gem City leaders are moving incrementally to create healthier neighborhoods and encourage more quality housing.
“There were about 42 recommendations that were put forth in the initial recommendation to the city commission and so the steering committee is helping to implement, they’re an implementation guidance committee and so they work with the city staff and help prioritize what are the ripe opportunities,” says City Manager Shelley Dickstein.
Right now, Dayton’s using American Recovery Act money, along with other state funds, to stabilize neighborhoods. To do this, it’s working to remove the blight of vacant buildings, and investing in renovations and repairs. Part of the work is in partnership with the Montgomery County Land Bank.
“We have a plan, five-year plan, and we’re in year three to remove about 1,100 blighted structures. And so, that’s really very exciting because the more blight we take out, it helps stabilize, but it also helps create opportunity for backfill or for other things to come onto the horizon,” says Dickstein.
The land bank also got state money to tear down 151 blighted properties. This is in addition to more than 1,000 nuisance properties Dayton is demolishing using COVID relief money.
As you might expect, blight removal is also a quality-of-life issue for many residents.
Middle Housing
An older four-family on Cincinnati’s West Side.
Newer townhomes in Avondale
Cincinnati is not alone when thinking ‘Missing Middle’ is the key to housing America. The Congress of New Urbanism writes in this article, “For the low-income households, subsidized housing is a must, but missing middle is affordable for those making 60 percent or more of AMI (area median income) in the following ways.”
- It increases supply, fills a gap in the market, and uses low-cost, wood-frame construction, making it “affordable by design.”
- It reduces the cost of transportation, due to the walkable location. “This is not a trivial issue because lower transportation costs mean more money in the pockets of households thereby making housing itself more affordable,” the authors report.
- It shares land costs and provides a range of smaller units.
- It provides opportunities for additional income, ownership, and equity building. Rent from accessory dwelling units (ADUs), for example, helps to pay the mortgage of the primary house.
- Missing middle works well within Community Land Trusts, which are a creative way to limit the cost of land in the short- and long-term.
The biggest barrier to building middle housing is zoning because many cities don’t allow duplexes, row houses and townhomes on lots zoned for single-family houses.
For cities that do allow it, there aren’t as many rent increases.
The Pew Charitable Trusts say zoning changes in Minneapolis helped increase its housing stock by twelve percent in just five years, which in turn helped keep the rent down. Most of the additional housing units were apartment buildings with at least twenty units.
This article compares Minneapolis to Cincinnati in housing units and rent.
Cincinnati middle housing developer Kai Lewars, principal at Kaiker Development, says he and other incremental developers are already taking advantage of the opportunities presented by Connected Communities to create more opportunities for middle income households.
He says, “We’re working on several developments in different communities, scattered site, new construction developments where those communities are going to see a great effect by connected communities.”
Large-scale apartments
For the first year in history more than 500,000 new apartment units are projected to come online in 2024. That’s thirty percent more than 2022, as demand for rental apartments continues to outstrip supply. And according to RentCafe and its commercial real estate market data company Yardi Matrix, despite uncertainties there will likely be a couple million more units in the next four years.
Cincinnati
Yardi Matrix Manager of Business Intelligence Doug Ressler says in 2024 Cincinnati will be Ohio’s second biggest builder and 32nd nationwide, welcoming 3,700 apartment units this year. Half of those are in the city limits. From 2024-2028 Greater Cincinnati, including Lebanon, Mason and West Chester, is projected to add 10,035 apartment units.
According to the Blume Community Partners who compiled Hamilton County data, just six percent of the housing stock is large multi-family buildings (50 units for more) and of all the units built since 2000 in Hamilton County, only 14-percent are in large multi-family buildings. In Montgomery County, according to Brick by Brick’s calculations from figures the auditor’s office provided to us, it’s 8-percent.
Dayton
Greater Dayton is on track to open 564 apartment units this year, 320 of those in the city proper. Through 2028 Ressler projects Metro Dayton will add 2,140 units including Huber Heights, Trotwood and Kettering. However, when compared to apartment construction between 2019 and 2023, the Dayton area is expected to see the second highest decrease or 41-percent less (1,546 units).
Filtering
Everyone can benefit from additional housing even if only one type is built, says Notre Dame researcher Evan Mast. It is called “filtering.” This is where newer housing frees up older, less expensive housing in what Mast calls a “migration chain.”
Mast says, “For example, let’s suppose that a new Procter & Gamble employee moves into one of these new buildings and maybe there’s some house a mile away that I otherwise would have lived in that is now vacant.”
His research shows with each round, housing is available at a lower price point. How long does that take? “It’s hard to exactly measure for each round to occur but in my research that for a new building to start to affect, like below-average income neighborhoods, that would take somewhere between two and five years.”
Mast says for every one-hundred new market-rate apartments, fifty vacancies are created.
Looking Ahead
Cincinnati City leaders say it could take three to five years before we see more density as a result of Connected Communities and “missing middle” housing.
Montgomery County is taking bids to build 40 homes and renovate another two dozen as part of a $7M land bank grant from the state. In addition, blight removal continues with many more parcels still to clear.
How quickly single-family home construction ramps up in either city depends on interest rates and the cost of materials.
The large-scale apartment building boom we’re seeing started years ago when interest rates were low, the housing gap continued to grow, and the supply of single-family homes was declining. Some of these circumstances have now changed according to Harvard’s Dan McCue.
“Completions are still rising or still pretty high but that’s stuff that was permitted two, three, four years ago, so it’s kind of a big train that has to turn and right now and that train is headed south.”
So while we are seeing an extended jump in large-scale apartment construction, it is expected to slow before the end of the decade.
Some wonder what the effect of the new presidential administration will mean for affordable housing.
The Business Journals reports, “Jim Tobin, president and CEO of the Washington, D.C.-based National Association of Home Builders, said builders he speaks with are optimistic a Trump administration will “turn down the heat” on regulations related to housing development.”
Tobin says his organization “will be engaging with the presidential transition team…. on numerous policies, especially regulations that affect land development.”
The Business Journals says, “A 2021 NAHB analysis estimated regulations imposed by all levels of government totaled $93,870, or 23.8% of the average sales price of a new single-family home at that time. That was a 10.9% increase from a similar analysis conducted by the NAHB in 2016.”
Executive Director of the National Leased Housing Association Denise Muha has her eye on regulatory costs. “She told Affordable Housing Finance, “Affordable housing is now a kitchen table issue so I imagine there will be more effort and interest to coalesce around additional strategies to encourage or facilitate the production of housing.”
And National Association of Affordable Housing Lenders CEO Sarah Brundage says, “I believe this Trump administration will have a greater focus on housing supply than it previously did given how housing affordability emerged as a top issue in the 2024 presidential election. It is likely the Trump administration will, once again, focus on removing regulatory barriers as part of their housing strategy.”
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Ann Thompson – Host, Producer
Over the last thirty years in Cincinnati, Ann Thompson has brought a wealth of knowledge and expertise to her reporting. She has reported and anchored for WVXU, WKRC, WCKY, WHIO-TV and Metro Networks and freelanced for NPR, CBS and ABC Radio. Her work has been recognized by the Associated Press and she has won awards from the Association of Women in Communications and the Alliance for Women in Media. She is a former News Director and Operations Manager. Ann has reported from India, Japan, South Korea, Germany and Belgium as part of fellowships. Ann thinks of the Brick by Brick project as “journalism for good.” She serves as host and producer. Ann lives in Anderson Township with her husband Scott. They have two boys. Jake graduated from the Air Force Academy in 2022 and Kurt attends West Point.
