Plexes Have Nothing to Do with Affordability: BRI’s Statement on Allowing Duplex Construction By Right in Older Neighborhoods

Bloomington Restorations, Inc. has worked to repair and revitalize core neighborhoods for decades. Our group has rehabbed or built 29 homes through our federally-subsidized affordable housing program. Over those decades, through house project after house project, we have come to understand the economics of these neighborhoods. We’ve worked in the near westside, Prospect Hill, McDoel Gardens, Maple Heights and other neighborhoods.

We have developed a great appreciation for these neighborhoods. They are compact: the lots are less than one-fifth of an acre. They are close in, reducing dependence on car commuting. And they are affordable. That affordability is a by-product of their size, typically two to three bedroom homes on small lots.

Here is an example: A house on W. Ninth Street is a 3 bedroom gable-ell house. The assessed value is $144,600. That value is not unreasonable. Over the last 12 months, 23 houses sold for less than $144,600 in the west side core neighborhoods.

Houses like this one on Ninth Street give people the opportunity to buy and own their own home at a price that’s less than the cost of rent. Through homeownership, people can build equity with every house payment and grow into the middle class.  

Let’s look at the numbers. At $144,600, someone who puts down 20 percent and takes out a 30-year mortgage at the current rate of 3.25 percent would have a monthly payment of $502.09. How much more would it cost these same people to rent a 3 bedroom unit in a duplex? Would their rent be $1,200, or $1,600, or $2,000? They would be paying two, three or four times more than the cost of buying, and there would be no building of home equity, no investment in their future.

Of course, not everyone can make a 20 percent down payment. Even with just 3.5 percent down, and including the cost of the required private mortgage insurance, the monthly payment would be only about $699.86.

Opening up these neighborhoods to development of plexes would pit homebuyers against developers, driving up prices and eroding affordability.

The core neighborhoods are a valuable asset to our community. Instead of destabilizing them by allowing by right development of duplexes, we should focus on ways to create more of these dense blocks of small houses on small lots — more of these affordable, compact neighborhoods.