Are Baugruppen the Answer to the Housing Affordability Crisis?

Housing affordability is a widespread problem and it has only managed to grow during the pandemic. Finance columnist Rob Carrick writes in The Globe and Mail:

"Without a blistering correction in the real estate market, a growing number of people will never own a house.... Housing affordability is a generational conflict — Gen Z and millennials who find houses unaffordable versus older generations who already own and benefit when prices rise. It’s also class-driven – young adults on their own versus well-off families helping their adult kids buy homes they could not otherwise not afford. And it’s regional – buyers from expensive cities have migrated to cheaper, smaller locales."

Carrick is writing from Canada, but the same thing is happening in the U.S., as noted by Bloomberg: "A measure of prices in 20 U.S. cities jumped 19.1%, up from 18.6% the previous month, the S&P CoreLogic Case-Shiller index showed Tuesday." According to The Economist, "For some millennials, the dream of home ownership may still prove out of reach."

But there are alternatives to traditional homeownership, such as Baugruppen—the German word for “building groups” that refers to a principle of collective housing. These are described by erstwhile Treehugger contributor and Baugruppen expert Mike Eliason on the website of his new venture, Larch Labs:

"At Larch Lab, we believe that Baugruppen, (German, lit. building groups) or self-developed urban co-housing, offer an appealing and more affordable alternative for those wishing to live in cities – near friends, family, and jobs. They are intentional communities in multifamily buildings developed by the residents that will be living in them, rather than developers. The elimination of developer profit and marketing costs can result in significant savings – from ten to twenty percent – over market-rate housing." 

It sounds a lot like cohousing, which has been slowly making inroads into North America. When asked what the differences were, Eliason tells Treehugger:

"They are similar in that they are co-planned/determined/developed by the inhabitants. I would say the largest differential is that baugruppen are typically much more urban (e.g. the R-50 in Berlin, shown above) and there is no requirement for a common house, though there are also several baugruppen that have them. In the end, they are really similar with subtle nuances and probably a little interchangeable. For me, it's really about the residents living in the kind of housing they need in urban environments - choosing what sort of amenity spaces they want (sauna, library, bike room, community room, music room, etc.) that makes living in denser environments, in communal housing, much easier to facilitate. And more affordable, with more diverse housing than you would see in a typical market rate development."

I have previously written about how Baugruppen would be perfect for aging baby boomers, but Eliason says it is good for everyone. "Baugruppen allow singles, couples, single parents, families with young children, and seniors to find their place in the city, affordably, and without contributing greatly to climate change," says Eliason.

That's because they are designed for flexibility and are usually multi-story on urban lots at what I have called the "Goldilocks Density."

"Dense enough to support vibrant main streets with retail and services for local needs, but not too high that people can't take the stairs in a pinch. Dense enough to support bike and transit infrastructure, but not so dense to need subways and huge underground parking garages. Dense enough to build a sense of community, but not so dense as to have everyone slip into anonymity."

Eliason claims the Baugruppen model is more affordable because it is "development without developers," saving its profits and marketing costs, which he estimates are between 10% and 20%. This is an arguable point: Developers are very good at beating up trades and negotiating lower prices—they often make decisions on the basis of price rather than quality. On the other hand, the R-50 Baugruppe in Berlin that he and I both admire has balcony guards made of chainlink fencing and raw concrete ceilings; developers spend money on granite counters, so this may all balance out.

More important is government support. In Canada, for example, thousands of cooperative units were built from the 1970s to the early 1990s with support from federal government programs until conservative governments cut all the programs in the name of austerity. In Germany, Eliason explains, "There are development and cooperative banks that have been open to financing these types of projects for decades." He adds: "Germany also has significant grants and subsidies for energy-efficient construction that can be used to partially fund the project." Baugruppen are encouraged and single-family sprawl is discouraged.

There are also problems with zoning in North America. "Land use codes preventing small- and medium-scale multifamily housing from most urban areas has dramatic effects on decreasing affordability," says Eliason. "Restrictions that limit multifamily housing to loud, polluted and dangerous streets could be repealed." These restrictions are slow to change because politicians are often beholden to their NIMBY voters.

But this may change, as millennials and younger cohorts come to outnumber the boomer generation and start demanding that something be done. According to Pew Research, "Multigenerational living has grown sharply in the U.S. over the past five decades and shows no sign of peaking."

Eliason says Baugruppen are multigeneration-friendly:

"They are intentional multigenerational communities, where young can learn from old, old can be enthused by young. Where residents can pick up groceries for a neighbor, elderly residents can help with childcare, households can teach each other how to garden, or repair and maintain bicycles. They offer a vision of community that is not often found in the massive, faceless apartment buildings that have proliferated in today’s urban landscapes."

In recent posts, I have been musing about how we should be building in a climate crisis, and now once again we have an energy crisis. I noted we should be building at the right density (Goldilocks), the right height (around five stories), and the right upfront and operating carbon regimes (natural materials and Passivhaus).

Looking at Eliason's prescriptions for building Baugruppen, I realize the buildings he describes are all of these things, adding in the issues of ownership and affordability, which is important in this time of an intergenerational housing crisis. As Eliason concludes, "The construction of decarbonized Passivhaus Baugruppen could be a win for all involved: green jobs, high-quality climate-adaptive buildings; comfortable living environments; low-carbon living, and affordable homes."

This is the way we should be building now.