The Brightwood fire as an example of the need for the legalization of a wider range of housing types

Photo from DCist.

Don't know if you heard about the terrible fire on Kennedy Street, an illegal rental, marketed to Ethiopians. The place was divided into a warren of bedrooms, for which residents paid about $300-$350/mo. each, for a room not much bigger than a bed. The house wasn't set up as a legal rental.

Two people died in the fire. And there are lots of stories about it. The mayor is calling for a criminal investigation, etc.

-- "Two People, Including A 9 Year Old, Were Killed In A Fire In An Unlicensed Rental," DCist
-- "Rowhouse where fire killed man and injured child was not approved for rentals, city officials say," Washington Post

To me, it merely reiterates my point that we need to provide different kinds of housing -- a much wider range-array. 

People are desperate.

It would be far better to support the provision of supermicro units in a legal and safe fashion. And that when we don't, we end up with what happened.

Yes, the property owner took huge risks and shouldn't have. But the market can push people in that direction.

 And it happens in other markets with similar conditions, like NYC and London. Probably SF, although they have a serious regulatory regime there. Etc.

-- "The woman who lives in a shed," Guardian
-- "Housing raid finds 26 people living in three-bedroom east London home," Guardian
-- "Man found living in 'coffin-like' cupboard in east London," Guardian

2. Sometimes, besides the promise of extranormal profits, people rent houses illegally because the cost to prepare and maintain a rental unit is high*, especially if it is subject to rent control.

-- "Deeper thinking needed on housing," 2012
-- "Gulyani Sumila, Bassett Ellen M. 2010. “The Living Conditions Diamond: A Theoretical and Analytical Framework for Understanding Slums.” Environment and Planning A 42 (9): 2201–19.

Gulyani and Bassett identify four elements shaping the provision of housing in "slums" in what they call the "living conditions diamond."


-- "Benjamin Marx, Thomas Stoker, and Tavneet Suri. "The Economics of Slums in the Developing World," Journal of Economic Perspectives, 27:4 (2013)
-- "BLAKE GUMPRECHT. "FRATERNITY ROW, THE STUDENT GHETTO, AND THE FACULTY ENCLAVE: Characteristic Residential Districts in the American College Town." Journal of Urban History, 32:2 (2006)

Note that I think the literature on Third World slums, which refers to both large districts and the housing within, is relevant to the developed world, especially in terms of the dynamics behind slum "dwellings," "student ghettoes," etc.

For high income neighborhoods and renters, this is less of a big deal, because housing in such neighborhoods commands top rents, and therefore the cost of compliance, while high, is much less than the revenue that will be received.

In areas where renters are less well off, there is greater chance of nonpayment, turnover is high, buildings are subject to extranormal abuse, etc., it's tough to make renting pay.

But it can, at least for awhile, especially if you don't reinvest in maintaining the property.

By contrast, in high income neighborhoods, after initial costs of preparing a dwelling for rent, the average maintenance costs are likely lower, compared to housing in low income districts.

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* We are doing this now.  Granted many of the things we should have done awhile ago, just as normal maintenance of a house.  But you let things go.  But some of the things required for renting, we wouldn't have done, such as storm windows on basement windows, which is an extra expense of over $2,500.

All told the prep costs will be around $9,000 (and that's with an extremely low priced handyman--the same work would likely cost double if sourced elsewhere.)  It will take  more than a year before those costs are recovered.  (Granted they are deductible expenses, although some have to be amortized.)