The Ups and Downs of Infill Housing

October 01, 2007
By  Michael O Minor

What is infill housing? Many in community development think of infill housing as new houses constructed on vacant, underused lots interspersed among older, existing properties in established urban neighborhoods. However, others broaden the definition to include major refurbishing or reuse of existing homes or buildings. This article will focus on the former definition.

According to the Urban Land Institute's Urban Infill Housing Myth and Fact Report, "the rapid growth of infill housing in U.S. cities has been spurred in large part by the emerging market demand from people moving back to the city." However, the institute's report also stated that "despite the construction and population gains, doubts remain that this trend can continue."

We will explore anecdotal evidence of which way the trend in infill housing development is going in four major urban areas in the Federal Reserve's Eighth District: Little Rock, Ark.; Louisville, Ky.; Memphis, Tenn., and St. Louis. Information was collected from key people in community development organizations.

In Memphis, Emily Trenholm, executive director of the Memphis Community Development Council (MCDC), arranged a special community development organization workshop to discuss a wide range of issues. When it came to infill housing, the discussion focused on four major challenges: new construction that does not match the styles of existing homes, finding qualified buyers for these homes, obtaining funding for administrative costs of such efforts, and pricing caps of some governmental programs that underpriced homes relative to buyer household incomes. Most infill housing in Memphis is purchased by low- and moderate-income households.

However, MCDC cited positive aspects as well. Construction financing has generally been available through governmental units, regulated financial institutions, and national intermediaries. Although infill housing has not always fit the profile of existing homes, residents in some neighborhoods were re-energized at the sight of new construction for the first time in 30 or more years. Finally, infill housing has reduced the number of problem properties and certain types of crimes in neighborhoods.

Melissa Pearce of the University District, Inc. (UDI) led a "development in action tour" of the area surrounding the University of Memphis. UDI is a member of the community development council. The tour revealed contrasting neighborhoods, from high-priced mansions to dilapidated houses, all within about a two-mile radius of the University of Memphis.

There were many examples of infill housing in the UDI area, including new homes built along the style of existing homes. There was a sense of continuity in these neighborhoods. However, there were several examples of discontinuity. Pearce said spot zoning had resulted in multifamily housing units being built alongside single-family dwellings.

Pearce addressed other concerns as well. As stated previously, community based organizations often lack funding for administrative costs, such as staff salaries and benefits, office space and marketing. Without these funds, the organizations are limited in their ability to develop a neighborhood housing strategy, identify available parcels and provide home-buyer education. Still, Pearce said she expects infill housing to continue at a strong clip, not only in the UDI area but in other neighborhoods in Memphis.

Middle- and higher-income infill housing is dominant in Louisville. Rob Locke, executive director of the Louisville affiliate of Habitat for Humanity, said the design of their homes for Louisville had to be refined from the typical "cookie cutter" design to that of higher-income households with distinctive architectural cues.

In Little Rock, Cynthia Stone, executive director of The ARC Arkansas, offered yet another perspective on infill housing. Arc Arkansas ( is a statewide membership organization providing support, advocacy, education and leadership to people with developmental disabilities and their families. Some of their infill housing includes multifamily units.

Stone said challenges for community organizations wanting to build infill housing include significant red tape, a lack of knowledge about available development tools and difficulty securing construction financing.

"Banks and lenders equate strength with financial liquidity," she said. "Lenders don't understand nonprofits. A nonprofit's strength is measured by its ability to meet the mission of the organization and the business integrity of its leadership."

The ARC Arkansas uses tax credit and bond opportunities in conjunction with typical construction and mortgage financing. Furthermore, the tightening of lending standards hampers their work, Stone said. However, Stone spoke highly of the work of national intermediaries like LISC and National Equity Fund, which provide technical assistance.

St. Louis is the final focal urban area. Kimberly McKinney, executive director of the St. Louis affiliate of Habitat for Humanity, offered comments based on her more than 20 years in the field. She said growth trends for infill housing will continue. This growth depends on collaboration among community based organizations, governmental entities and the private sector, she said. In the end, efforts in St. Louis seem to offer benefits through better neighborhoods and higher property values.

One of the obstacles to building infill housing is the increasing cost of land, McKinney said. Her group has been able to secure some parcels from local government at no cost or with HOME funds from the U.S. Department of Housing and Urban Development. Finally, Habitat for Humanity is in a unique position. It is both the builder and the mortgage company. In St. Louis, Habitat for Humanity has a less than 1 percent foreclosure rate.

Peter Murtaugh of the Ranken CDC in St. Louis continued the discussion on infill housing in St. Louis. He said infill housing efforts should be focused on one block at a time, ensuring that no vacant lots or dilapidated structures are left. If not, these problem properties could make neighborhoods unclean and unsafe. Furthermore, infill housing developers need to consider residents already living there. How will this new development affect them? Urban designs for infill housing must reflect the architecture and landscaping of the neighborhoods.

Throughout the Eighth District, anecdotal evidence shows continued growth in infill housing in the near future. While some locations are seeing efforts focusing across all income strata, infill housing in urban neighborhoods often provides home ownership opportunities for low- and moderate-income households. Financing for such development was mostly available.

In addition to providing affordable, safehousing for residents, cities benefit through better neighborhoods, increased property values and increased property tax role valuation.

Overall, anecdotal evidence supports the notion that the St. Louis District is mirroring the national trends for continued growth of infill housing. In contrast to the ULI forecast cited earlier, the St. Louis District looks to continued growth in infill housing.

Bridges is a regular review of regional community and economic development issues. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.

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