Earlier this month Harvard University’s Real Estate Academic Initiative released their third annual Harvard Journal of Real Estate, featuring case studies of innovative practices in real estate – including New Avenue.
New Avenue is studied on page 47 in the section entitled “Designing Affordability: Developing New Ecosystems for Equitable Housing Provision.” CEO Kevin Casey explains the formidable San Francisco Bay Area housing crunch, and how New Avenue enables affordable living in spite of it.
Here’s a snippet from the publication:
Building Homes While Taking Land Out of the Equation
Kevin Casey saw a number of problems in the Bay Area housing market. Aging homeowners felt trapped in their houses, owing to skyrocketing real estate prices and the unintended consequences of Proposition 13, a property tax referendum from 1977. Under the law, long time homeowners had their property taxes rolled back and future increases capped. However, buying a new home would mean bumping payments up to current tax rates. This “captivity” of the empty-nesters creates a condition whereby senior citizens are aging in place and younger singles and couples are priced out of the market due to low inventory, high rents, and a stock of mostly large single family homes. Casey created New Avenue Homes to address the problems of each demographic group.
Using the tools of social media, commercial finance, and efficient construction, New Avenue identifies jurisdictions that allow accessory dwelling units and matches existing homeowners to architects and contractors. At present, New Avenue serves as a kind of “OkCupid” or online dating, for owners, contractors and tenants, says Casey. For the owners, new options emerge, including the ability to live in a downsized unit without having to leave the neighborhood, collect rental income, provide accommodations to ageing parents, or house boomerang children. For younger people, there are now new, relatively affordable housing choices in prime neighborhoods.
Casey states, “The anthropologist in me believes that our homes and our communities should address our emotional and social needs.” He notes that he “founded New Avenue to offer an alternative to the broken financial and home building industries that have lost touch with this mission (and also happened to create the biggest financial crisis since the Great Depression).” The key to New Avenue’s formula for housing provision goes beyond just providing the accessory dwelling unit (ADU); it has developed a data-driven, standardized service delivery platform showing real-time invoicing and construction progress. In essence, each homeowner can become an affordable housing provider, innkeeper, cottage dweller, or any number of other possibilities, all while ensuring costs stay in line and completion dates are kept.
This model alleviates the typical fears of homeowners by allowing them to coordinate with architects and general contractors, track milestones, and keep the budget in line. With more than 100 structures completed, New Avenue has helped build custom accessory dwellings, taken land costs out of the equation, and provided opportunity to existing residents as well as a younger cohort in search of affordable options near vibrant city centers.
Looking forward, New Avenue sees its role as a one-stop shop. With scale and willing financial partners, New Avenue could move to a system where, under a long-term contract, it would build the accessory unit, provide property management, and pay out dividends to the homeowner over an amortization period, after which the owner would control the unit.