Shipping containers: More overpriced fad than affordable housing

The January 7th edition of the Herald-Leader included an article celebrating shipping containers as an important contribution to the problem of affordable housing provision in Lexington. The installation of a shipping container house (alongside a few adjacent houses to be constructed simultaneously) on York Street in Lexington’s Northside is part of the North Limestone Community Development Corporation’s (NoLi CDC) LuigART Makerspaces project, which uses a national grant to create a new “live-work community where homeowners — artists and craftsmen — can live and sell art or other goods out of their homes.” The Herald-Leader tells us that the containers were cheaply obtained by developers, quickly assembled, and are already weatherproof; while purchase of the roughly $75,000 unit will be limited for the next fifteen years to those with annual incomes of no more than $38,200 a year as a way to forestall gentrification.

This ostensibly progressive development, in an area of Lexington that is simultaneously characterized by high poverty and a representative frontier of gentrification, seems to have been received with a fair amount of fanfare, like countless other developments within the area. However, our argument is that this praise — which could very well reflect the desire of well-meaning people to see something, anything, done with regard to ameliorating the plight of low-income citizens trying to meet their habitation needs — is unwarranted. Insofar as the sale of supposedly affordable shipping containers is portrayed as an answer to the rising cost of housing, the root problems remain undiagnosed and unaddressed, while more far-reaching potential solutions continue to be sidelined. We’ve identified at least four shortcomings to the idea of the shipping container homes, and broader Makerspaces project, that render it an insufficient approach to addressing the question of affordable housing provision in Lexington.

Issue 1: Scale

First, by using county-wide statistics to establish who qualifies as sufficiently low-income to purchase one of the Makerspaces, NoLi CDC is enabling people with substantially higher incomes than is common at the neighborhood scale to move in, when it ought to be using its resources to provide permanently affordable housing for existing residents of the so-called NoLi district. According to the Herald-Leader article, “the homes will come with deed restrictions,” which stipulate that “only those who make up to 80 percent of Fayette County’s median income may own the property.” Data from the 2014 American Community Survey (ACS) states that the median household income in Fayette County is $48,667. But in Census Tract 3, which contains York Street and much of the surrounding North Limestone neighborhood, the median household income is substantially lower at $19,414. This methodological sleight-of-hand has significant consequences when it comes to determining who will be served by this much-celebrated project.

Median Household Income at the Census Tract Scale. Full Interactive Map available here.

For those who are keen to prevent displacement, wouldn’t a more place-appropriate method of establishing low-income eligibility require that the shipping container homes (as well as other NoLi CDC developments, or, for that matter any development whatsoever, such as the Arlington Lofts) be reserved for those who make up to 80% of the median household income for the surrounding neighborhood, rather than the county as a whole? The failure to ensure that the primary beneficiaries of new development are people who constitute the segments of the working class making less than $15,600 suggests that what is being built is destined for relatively better-off newcomers rather than for long-term residents of the area, where nearly half of the households are struggling to get by under the poverty level. Despite NoLi CDC’s claims to the contrary, it is difficult to see how the existing income restrictions qualify as a strong anti-displacement mechanism if those who are eligible include people making twice as much as the neighborhood-level median household income.

Issue 2: Time

A second problem with the deed restriction is that its timespan is too short. The aforementioned principle in which the purchase of a shipping container home is limited to those making no more than $38,200 will last only 15 years. That is not a very long time as far as property markets are concerned, especially ones like this that are experiencing a fair amount of dynamism. By 2031, NoLi CDC will no longer be able to prevent individuals of any income from buying the units, nor will it be able to prevent the potential inflation of shipping container home prices far beyond the original $75,000 price tag through speculative purchases and resales by affluent actors motivated more by the prospects of investing in real estate (particularly in places where the appropriation of higher rents in the future looks possible) than settling into a satisfying domestic situation.

Issue 3: Cost

The next issue worth raising is that $75,000 seems an enormous amount of money to pay for a shipping container home in the first place. It is unclear how a small unit of at least partially pre-fabricated housing ended up coming with such an unreasonably high price tag. Unimproved shipping containers are being sold for less than $2,000. According to the Herald-Leader article, the installers have already welded two of them together to create a single unit of housing. What will future consumers of this housing be paying an additional $71,000 for? Granted, more work is slated to be done on the interior and exterior over the course of the next few months before the project is considered complete. It would be interesting to know just how many hours of work will be necessary to convert a shipping container into adequate shelter that is comfortably inhabitable. Given that much of the housing unit comes already manufactured, it could presumably take less time than a home built with standard materials. Regardless of the actual number, however, the majority of the $71,000 is most likely not going into the pockets of the laborers who have spent and will be spending time transporting and transforming the structures, though a substantial amount is likely to go to the management of the contractor, ReContained. Perhaps unsurprisingly, ReContained is a subsidiary of Emerge Contracting, a sister company of Emerge Development, who we’ve profiled previously for their active involvement in the gentrification of Lexington’s northeast quadrant.

Maybe the future consumers of this housing will be paying for the land? We thought that the not-for-profit entity NoLi CDC used its donation/grant revenue (which could very well include public money) to buy the land for socially beneficial purposes (such as providing very affordable rental housing to low-income tenants as a nonprofit landlord, akin to a housing authority managing public housing — an institution that has sadly been largely wiped out, but for which there remains high need), but now it appears that it purchased the land with intentions of selling it. And the proposed selling price is steep, one might add. Indeed, the shipping container and additional houses being built on York are slated to be sold for prices that far exceed the estimated property values of much of the surrounding housing stock, according to Zillow Zestimates.

Zillow Zestimates for the North Limestone area. Full Interactive Map available here.

Who can explain why these containers are so expensive? Can this really be characterized as affordable housing? The unreasonably high cost of the shipping container homes being developed leads us to suspect that any creditors involved in funding the project (assuming at least some of it has been debt-financed) and the eventual mortgage lenders are the ones who ultimately stand to be the biggest beneficiaries of this project. One could conceive of this as a situation in which some combination of public and philanthropic money (along with the future income of working class housing consumers) is eventually funneled to finance capital, an upwardly-destined transfer payment that fails to redistribute wealth to the poor (surely a prerequisite for genuine community development).

Issue 4: Needs

Finally, there are some potentially quite serious problems with respect to how shipping container homes relate to their wider setting. Everyone deserves to live in high quality housing and healthy neighborhoods, which necessitates equitable access to goods and services that improve one’s standard of living. Given that the prevailing spatial form of Lexington entails a fair amount of sprawl, however, it is difficult to see how shipping container homes alone would meet the daily needs of North Limestone residents at this time. Residences this small might be more acceptable were they surrounded by ample public facilities (communal kitchens/cafeterias, laundromats, transit to reach jobs, recreation centers, libraries, etc.). But as of now, not all of these things are located in close proximity to the dwellings, which leaves a lot of question marks about how a resident is supposed to reproduce themselves on a daily basis in a comparatively small space, in an environment that is relatively isolated from necessary resources, particularly if they lack access to a automobile in a city with a minimal alternative transportation options. Housing is embedded within a broader context, a reality that is important to acknowledge and wrestle with, even if it is an issue that understandably exceeds NoLi CDC’s capacity to address.

Area comparison of two side-by-side shipping containers and a single-wide mobile home.

Given the extremely constrained size of a shipping container housing unit, we’re further compelled to ask why more attention is not being paid to architectural plans that could accommodate a diversity of household sizes? Although we agree with NoLi CDC’s Kris Nonn that housing need not “be boring or mundane,” (see here for some interesting examples), what are we to make of the romanticism entailed in the idea that a few hundred square feet of metal is a “nod to the past” of North Lexington’s industrial heritage? The workplace is not necessarily something that many people want to bring home to the living place. Neighborhood history and memory are crucial, but is it really appropriate to assume that working class people are eager to be surrounded by the same materials that constitute the elements with which they or previous generations are/were exploited on a daily basis? Which then disappeared quite quickly, leading to the present state of economic depression that still faces many communities in our city and country more broadly? That may be the case for some, but for others it may seem like a cruel reminder that the hours of backbreaking work one does (or might have done previously) winds up enriching some CEO that lives in a mansion somewhere far away.

Alternatives

Instead of putting shipping container homes on the pedestal of progress, we need to be cognizant of their significant shortcomings. As new developments continue in this area, Lexington needs more than an immediate and uncritical acceptance of every fashionable project that barely deviates (if at all) from the status quo. As well-marketed and alluring as NoLi CDC’s efforts may be, they convey a significant lack of understanding of the nature and extent of the housing crisis. The key to actually addressing the problem of housing in cities like Lexington isn’t to find the right design, but to redistribute political and economic power from the top of the socioeconomic ladder to the bottom.

In the hypothetical scenario that NoLi CDC were to adopt a more stringent, geographically-specific and enduring low-income eligibility criterion, its claim about including safeguards that effectively prevent the displacement of existing residents could more reasonably withstand critical scrutiny. However, in order for NoLi CDC to not facilitate gentrification and to instead play a role in the provision of truly affordable housing in perpetuity, it would have to abandon its narrow focus on initiatives that increase the homeownership rate in favor of becoming an organization committed to contributing to the implementation of a right to housing for all people. Such an agenda would focus not on increasing the number of mortgage loans being signed, which ultimately ensnare workers in debt while bolstering the real estate and financial industries, but rather on securing universal access to decent housing.

The latter is something that working people of varying levels of income need badly. We are hardly under the impression that those who make between $15,600 and $38,200 (80% of the neighborhood-level median household income and county-wide median household income, respectively) are rich people out to take advantage of cheap housing options at the expense of needier populations. To the contrary, the majority of people, even those making over $40,000 a year, are being squeezed by the combination of stagnating wages and increasing costs of basic necessities, which should signal that for most of us, the need for alternatives to the private rental sector as well as to home “ownership” through indebtedness, both of which are exploitative and expensive, is growing.

Rather than perpetuating the conventional property market, why doesn’t NoLi CDC put the parcels it owns into a community land trust (of which Lexington already has one)? Or use some other mechanism to distribute housing resources more equitably? Maybe then we could say that NoLi CDC is investing in such a way as to improve the tangible well-being of the neighborhood (by successfully converting abandoned lots into permanently affordable housing, for example), rather than just finding ways to increase the private wealth of those few individuals who stand to benefit from a whiter, more middle class, more ‘creative’ demographic moving into the neighborhood.

What would it look like if we were to successfully remove profit-seeking from the realm of housing — not merely in name, but in practice? What is needed is to withdraw heavily commodified, privatized, and financialized resources like land from the speculative market and put them into social ownership and under democratic control. Perhaps then we could say that peoples’ needs were being put before the profitability of capital.