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Every analysis, breakdown and explainer, newest first.
Housing 101
The owners of a new building put in the money that absorbs losses first. This lesson explains why that money has a price, how the price is measured, and what happens to construction when it is not paid.
Housing 101
Most of the money in an apartment building is borrowed. This lesson explains the construction loan, the permanent loan, how lenders size them, and how the mortgage constant turns debt into rent.
Housing 101
Revenue, vacancy, operating expenses, net operating income, yield on cost, cap rate, DSCR, cash-on-cash. The pro forma decides whether a building gets built. If the math does not close, nobody builds.
Housing 101
Lenders and investors front the cost of a new building in layers, each with its own risk and return. Renters repay them through rent, and sometimes the public covers part of the cost through subsidies.
Interest Rates
A one-point rise in the loan rate adds about $93 a month to the rent our illustrative 120-unit project requires, before investors and construction lenders reprice. We show the arithmetic and the second-order effects.
Regulation
Nothing about the building changes when construction start slips a year. The land loan, the taxes, the consultants and the contractor's price keep moving. We add it up and convert it into rent.
Development
Is rent high because developers take too much? We trace every dollar of "developer profit" in a $30,000,000 apartment building and find the fee explains $68 of a $2,415 rent, while the cost of capital explains far more.
Public Finance
Tax-exempt bonds, public land, patient equity, revolving loans, grants and tax abatements each lower required rent on a modeled 120-unit building. Each also has a payer. Here is what every model is worth per month.
The Housing Breakdown
A complete, reproducible pro forma for an illustrative 120-unit garden apartment project. Land, construction, financing, taxes, operations and returns, converted into the $1,996 monthly rent the building needs.
Affordability
Housing affordability is usually argued as a question of blame. It is better understood as arithmetic: land, construction, money, rules, operations and returns, added up and divided by units.
