Latest / ChangeMakers with Katie Goar / Episode 146: Jared Jones Co-Founder, Middle Housing Partners

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Episode 146: Jared Jones Co-Founder, Middle Housing Partners · ChangeMakers with Katie Goar

0:05
Speaker 1: This is change Makers with Katie Gore finding the right
0:09
Speaker 1: solutions for the affordable housing community.
0:13
Speaker 2: Today's change maker is Jared Jones, the co founder of
0:17
Speaker 2: Middle Housing Partners. Jared has spent more than fifteen years
0:21
Speaker 2: in real estate development and through Middle Housing Partners, Jared
0:25
Speaker 2: focuses on microfill housing think Adu's duplexus, triplexes, and multifamily
0:33
Speaker 2: buildings that fit into existing neighborhoods. Today, the firm manages
0:38
Speaker 2: over one hundred million dollars in assets, all centered on
0:43
Speaker 2: a belief that housing supply doesn't need to come from
0:46
Speaker 2: massive developments. Jared, welcome to the podcast.
0:51
Speaker 3: Thanks for having me.
0:52
Speaker 2: It's a pleasure to have you, and we have a
0:54
Speaker 2: lot of things to cover, but first I usually like
0:57
Speaker 2: to start these conversations just to get an understanding on
1:01
Speaker 2: how you came into housing, or how you came into
1:04
Speaker 2: this business and created these assets that we're now going
1:09
Speaker 2: to talk about.
1:10
Speaker 3: Well, I straight out of college, I started in the
1:16
Speaker 3: mortgage industry and that was about two years prior to
1:21
Speaker 3: the market crashing, and so I did get to see
1:27
Speaker 3: a lot of the collateral damage that was done to
1:31
Speaker 3: the economy where I live. The Inland Empire southern California.
1:35
Speaker 3: We were one of the hardest hit places, and in
1:39
Speaker 3: that timeframe saw some massive changes in the way that
1:43
Speaker 3: housing got built, and really we saw the lack of
1:48
Speaker 3: building over the last fifteen years. And so basically about
1:56
Speaker 3: five years ago, the laws started to change significantly in California,
2:00
Speaker 3: allowing for the kind of development that we do, And
2:03
Speaker 3: because I had experience in a lot of real estate
2:06
Speaker 3: sales and flipping of properties and owned a decent little
2:11
Speaker 3: rental portfolio, started using those laws to modify our portfolio,
2:16
Speaker 3: helping clients do the same thing, and it put us
2:19
Speaker 3: in a position where before we knew it, we had
2:22
Speaker 3: built a development company.
2:25
Speaker 2: So how does your model work at a high level?
2:30
Speaker 2: Why don't you start us from scratch there too?
2:32
Speaker 3: Yeah, So, I mean pretty basically, most of the time,
2:36
Speaker 3: we were finding properties that have like a very big backyard,
2:40
Speaker 3: you know, maybe a small house on a big lot,
2:42
Speaker 3: and we're adding three to ten eight us which are
2:48
Speaker 3: just separate dwelling units or town homes, duplexes, things like that,
2:55
Speaker 3: where they're either attached or detached from each other, and
3:00
Speaker 3: we're just utilizing underutilized lots and basically we're able to
3:07
Speaker 3: create kind of more like what you used to see
3:11
Speaker 3: post war like, post World War two, a lot of
3:14
Speaker 3: eight hundred to twelve hundred kind of square foot houses
3:19
Speaker 3: and fill up these massive lots in southern California where
3:23
Speaker 3: people are really just you know, growing grass for fun.
3:28
Speaker 3: And basically we're able to put people back in the
3:32
Speaker 3: neighborhoods that otherwise aren't very affordable for them. And so
3:37
Speaker 3: that's it. We use those kinds of units. We'll typically
3:42
Speaker 3: refinance them and rent them out, and recently the laws
3:46
Speaker 3: have changed in a way that we can start selling
3:48
Speaker 3: those units to individuals.
3:50
Speaker 2: Separately, you mentioned that in the last few years the
3:54
Speaker 2: laws have changed to allow some of this. I'm assuming
3:57
Speaker 2: all of the zoning laws and things like that. Are
4:01
Speaker 2: there some particular advantages now that you're seeing that allows
4:05
Speaker 2: this to happen.
4:07
Speaker 3: Yeah, in California, our housing crisis has gotten so bad.
4:12
Speaker 3: And for context on that, for every three houses you
4:15
Speaker 3: see in California, we need a fourth and so that's
4:20
Speaker 3: three and a half million housing units that we need.
4:24
Speaker 3: So the state has come in and said, hey, all
4:28
Speaker 3: is well and good with zoning, except for the fact
4:30
Speaker 3: that we're not creating any housing and so basically if
4:34
Speaker 3: it zoned to allow housing in any way, you're now
4:38
Speaker 3: allowed to put up to ten units on that property.
4:42
Speaker 3: And so the strategic change there that's really enabled developers
4:50
Speaker 3: like ourselves is that you used to have to go
4:54
Speaker 3: in with like this whole dictionary of each city's zoning
4:59
Speaker 3: rules to say, well, I don't know what can I
5:01
Speaker 3: do here? How many feet back does that have to be?
5:03
Speaker 3: How tall can it be? And then after you you
5:08
Speaker 3: learn that bible, right, like, you get to the point
5:12
Speaker 3: where you're allowed to submit for an application. But then
5:16
Speaker 3: a lot of those rules are subjective, like they're like, oh,
5:19
Speaker 3: we really want it to be this color that you know.
5:21
Speaker 3: Those kinds of things have really stopped housing and make
5:26
Speaker 3: it made it so even tiny projects like what we
5:29
Speaker 3: do take four or five years to get through the
5:33
Speaker 3: entire process. And so the state has made it so
5:37
Speaker 3: that those rules now apply only to projects that are
5:43
Speaker 3: not for housing. And so these housing, smaller housing projects
5:47
Speaker 3: that we do, they have objective or like set standards
5:52
Speaker 3: that apply across every city. And so now I don't
5:56
Speaker 3: have to know all the rules of every city. I
5:59
Speaker 3: just have to know my stay eight rules and then
6:01
Speaker 3: I take them into this city and I say, hey,
6:03
Speaker 3: here's what we're doing. This is a state rule project,
6:06
Speaker 3: and so here's how it goes. And you know, we
6:09
Speaker 3: still have to go through the process with these cities
6:14
Speaker 3: because they don't always understand how that works, right, Like
6:19
Speaker 3: for them, they're like, no, we get to tell you
6:21
Speaker 3: what color it is, right. But so it's a shift
6:24
Speaker 3: for them. But ultimately the biggest win here for housing
6:29
Speaker 3: in California is the fact that the state has come
6:33
Speaker 3: in and said, these are the state mandated rules everybody
6:37
Speaker 3: has to use. So I can do the same thing
6:39
Speaker 3: in Sacramento as I can do in San Diego, as
6:42
Speaker 3: I can do in Eureka. And so that's a very
6:46
Speaker 3: very important shift that's been made for these kinds of
6:51
Speaker 3: housing units to start getting built.
6:54
Speaker 2: You mentioned the underutilized lots, and in my mind, I
6:57
Speaker 2: first started thinking about, you know, you have a huge,
7:02
Speaker 2: massive parking lots for you know, malls or commercial strips
7:06
Speaker 2: or places of worship that you use it maybe two
7:09
Speaker 2: days a week or something. But you also have a
7:12
Speaker 2: lot of green space too that are you know, in areas.
7:17
Speaker 2: You know, that was where my mind was going. But
7:19
Speaker 2: tell me exactly what underutilized lots, What you're being able
7:24
Speaker 2: to convert and then maximize on some of that space.
7:28
Speaker 2: What's that look like? Sure?
7:30
Speaker 3: Well, and so like theoretically, I just want you like
7:34
Speaker 3: our average project, right, I want you to think of
7:37
Speaker 3: a lot in a neighborhood that's fifteen thousand square feet
7:42
Speaker 3: and probably an older neighborhood if it's that size, right,
7:46
Speaker 3: But the time that those houses were built, you're usually
7:50
Speaker 3: going to have like a thousand square footprint. And so
7:54
Speaker 3: that means I have fourteen thousand square feet of unused
7:59
Speaker 3: land on that property. Well, if I'm building two story
8:03
Speaker 3: units and they're going to be a thousand square feet apiece,
8:07
Speaker 3: like just for quick and dirty math, if I want
8:10
Speaker 3: to add ten more units, I'm only eating five thousand
8:13
Speaker 3: square feet more of land. Yeah, right, And so what
8:17
Speaker 3: we do is we come in and say, okay, well,
8:21
Speaker 3: I you know, we come in and say, okay, we're
8:23
Speaker 3: going to do ten of these. We're going to take
8:25
Speaker 3: up five thousand more square feet of land, still only
8:29
Speaker 3: covering six thousand square feet of a fourteen thousand or
8:33
Speaker 3: a fifteen thousand square for a lot. But what we've
8:36
Speaker 3: done is we put a whole bunch of people in
8:38
Speaker 3: that neighborhood. Most of them actually grew up and these
8:41
Speaker 3: neighborhoods were bringing them back into But we've created ten
8:47
Speaker 3: more housing units for families that want them and need them.
8:54
Speaker 3: But we're what we're not doing is we're not building
8:56
Speaker 3: three thousand square McMansions that are going to cost two
9:01
Speaker 3: million dollars. Right.
9:03
Speaker 2: Right, You mentioned that you're building in existing neighborhoods. People
9:08
Speaker 2: are coming back to these neighborhoods, their neighborhoods of choice,
9:12
Speaker 2: they've got infrastructure. What is the tone when you start
9:19
Speaker 2: to work with these types of projects, Like, how do
9:23
Speaker 2: you go about, you know, working in these neighborhoods with
9:27
Speaker 2: that existing community footprint?
9:30
Speaker 3: Yeah, and so I think that there's a couple questions
9:34
Speaker 3: that can be answered out of that. If this were
9:38
Speaker 3: a deposition, i'd only answer the question that you asked.
9:41
Speaker 3: But I think typically the intent of that question leans
9:46
Speaker 3: more into how the neighbors react, right, And so with
9:52
Speaker 3: the normal process through the city, you have to go
9:54
Speaker 3: through the process of letting neighbors know what's going on.
9:57
Speaker 2: Right.
9:58
Speaker 3: You don't have to notice neighbors in this and so
10:02
Speaker 3: that's not necessarily a part of the process. But then
10:05
Speaker 3: The second piece of that is how do the neighbors
10:07
Speaker 3: actually directly react when there's construction going on, and you know,
10:13
Speaker 3: we get mixed We get mixed interactions with neighbors, and
10:17
Speaker 3: some of those are very good where they're like, wow,
10:21
Speaker 3: I didn't know we could do this. Can you do
10:22
Speaker 3: one for me? Like straight out of the gate. Yeah.
10:26
Speaker 3: We also get the other, which is like we have
10:29
Speaker 3: had people deliver petitions to the city and this is like, hey,
10:33
Speaker 3: there's nothing we can do here, like this is the law.
10:38
Speaker 3: But then we oftentimes see those neighbors turn the corner
10:45
Speaker 3: towards the end where they're coming to us and saying like, hey,
10:48
Speaker 3: ok we see what you did here, and actually this
10:50
Speaker 3: is kind of interesting. Do you think you could build
10:53
Speaker 3: one for my mom?
10:55
Speaker 2: Right?
10:55
Speaker 3: And once you know, it gets scary when we don't
11:00
Speaker 3: know like how something's going to affect us. But once
11:04
Speaker 3: we start to see it and that neuroplasticity sets in
11:08
Speaker 3: and we're like, oh, this is normal, right, that's when
11:12
Speaker 3: we can start to see, Okay, well if this could
11:16
Speaker 3: solve a problem for me, for my family, for my friends,
11:19
Speaker 3: for my financial situation, now I see the benefits of it,
11:24
Speaker 3: and so we see that most of the time that
11:27
Speaker 3: people turn the corner, we don't have very many angry neighbors.
11:31
Speaker 3: Long term. We do get a little bit of that
11:34
Speaker 3: during construction, no question, but ultimately I think that once
11:42
Speaker 3: people start seeing their neighbors and they're just regular people,
11:47
Speaker 3: it's totally fine.
11:50
Speaker 2: There used to be a portion of time when we
11:54
Speaker 2: had to convince people there was a problem and a
11:57
Speaker 2: housing shortage, and now this seems to be just commonality
12:02
Speaker 2: that everybody knows. There's this crunch of affordability, but specifically
12:07
Speaker 2: in the cities that you're working. And do you want
12:10
Speaker 2: to frame some of this problem for us, Maybe give
12:14
Speaker 2: us the scope of why it's so hard to have
12:19
Speaker 2: housing in the places that you're mentioning, or just the
12:22
Speaker 2: volume of need you want to speak to either one
12:24
Speaker 2: of those two.
12:25
Speaker 3: Yeah, I would say, like contextually, when we look at
12:30
Speaker 3: how many houses are needed in the United States right now,
12:33
Speaker 3: it's about eight million, give or take well almost half
12:38
Speaker 3: of that is just in California, and so that's a
12:42
Speaker 3: big deal from that perspective. But here's a number that
12:45
Speaker 3: speaks more directly to that. When you look at the
12:51
Speaker 3: top ten most expensive rental markets in the nation, six
12:57
Speaker 3: of those markets are in California, and so the first
13:02
Speaker 3: five are in areas that are in southern California that
13:05
Speaker 3: we work with, and you'll know the name San Diego,
13:11
Speaker 3: you know, Orange County, Los Angeles County, Riverside County is
13:17
Speaker 3: where we work, San Francisco, like the Bay Area, and
13:21
Speaker 3: then Sacramento. Those are the tops. Those are six of
13:25
Speaker 3: the top ten least affordable rental markets in the nation
13:29
Speaker 3: on that list, or other cities that you know, New York, Miami,
13:34
Speaker 3: Denver and so like these places, it is extremely unaffordable
13:40
Speaker 3: to live. And for a context, like when my parents
13:46
Speaker 3: graduated from school, you could go out and get an
13:49
Speaker 3: average job, just like a regular job and buy a
13:54
Speaker 3: house on one income. Today, that same house in my
13:59
Speaker 3: city with the same kind of income that median income,
14:04
Speaker 3: the medium one income household, you need six of them
14:08
Speaker 3: to buy the same house. And like it's not magic,
14:15
Speaker 3: supply and demand is clear. We just need more houses.
14:18
Speaker 3: But we've restricted ourselves in such a way that the
14:23
Speaker 3: building of the houses is not the issue. We have
14:26
Speaker 3: the people to build them, We have the desire from
14:29
Speaker 3: the people who need them. Like the issue the cost
14:34
Speaker 3: to build them, specifically, the unit is not the issue.
14:39
Speaker 3: The issue is the rules are so difficult to get
14:43
Speaker 3: through the process financially to buy a piece of land
14:46
Speaker 3: and then build the property five years later. That's a
14:50
Speaker 3: long time to be able to do this thing. And so, like,
14:55
Speaker 3: one of the things that I learned pretty quickly as
14:57
Speaker 3: we were starting to develop is if if I go
15:00
Speaker 3: out and I want to put my money as an investor,
15:02
Speaker 3: just a passive investor, and I'm going to go stick
15:06
Speaker 3: it in the bucket of a guy that's a developer,
15:08
Speaker 3: He's going to say, great, and five years you're going
15:10
Speaker 3: to get your money back and you're going to make
15:12
Speaker 3: about twenty percent on your money. Great, Like, I'll do that.
15:16
Speaker 3: That's a decent deal. Well, the thing is, when we
15:21
Speaker 3: look at the economics on that, if I can compress
15:24
Speaker 3: that down into one year, what it does is it
15:27
Speaker 3: allows me to more predictably build different kinds of housing. Otherwise,
15:33
Speaker 3: like what happens is the people that go and make
15:36
Speaker 3: that bet, they're the people with a lot more money, right,
15:39
Speaker 3: And so like Wall Street, Wall Street builds our housing
15:43
Speaker 3: in the United States, and really the creation of the
15:50
Speaker 3: housing makes you about the same amount of money. Like
15:55
Speaker 3: sticks and bricks cost the same whether it took five
15:57
Speaker 3: years to get there or one year to get there,
15:59
Speaker 3: But you have to justify the return on investment long term.
16:03
Speaker 3: So the point is when you make laws really simple
16:06
Speaker 3: and easy and the average Joe can go out and build,
16:10
Speaker 3: average Joe is going to go out and build, and
16:12
Speaker 3: we're going to start to get projects that're accessible to them.
16:16
Speaker 3: But then in turn, those kinds of projects are the
16:19
Speaker 3: projects that are accessible to the market too. And so
16:24
Speaker 3: there's lots and lots of reasons that these incentives are misaligned.
16:29
Speaker 3: But one of the biggest ones is like, who has
16:34
Speaker 3: the ability to go out and build projects? And I
16:38
Speaker 3: think that as we bring the ability back to Main
16:41
Speaker 3: Street to build housing for themselves, well, guess what, we're
16:45
Speaker 3: going to start to build housing for people that seem
16:48
Speaker 3: like us, that feel like us, like our friends. We're
16:52
Speaker 3: not going out and trying to build to what the
16:56
Speaker 3: highest possible dollar value is. We're trying to build for
17:00
Speaker 3: who we know.
17:01
Speaker 2: That's a great way to put it, because it's it's
17:04
Speaker 2: the piece of yes, the return on investment, but you've
17:07
Speaker 2: also got this piece where you want to mitigate risk
17:11
Speaker 2: to get into the deals you know you don't really
17:13
Speaker 2: want it to take five to six years and costs
17:16
Speaker 2: to go up, but you also you want to do
17:20
Speaker 2: business with the person you know who's on the ground
17:26
Speaker 2: and who can do the deal too. So you're you
17:28
Speaker 2: added a unique piece here where most people want to
17:34
Speaker 2: know the builders. Most people want to be able to
17:36
Speaker 2: have that relationship aspect, and I think that's what your
17:41
Speaker 2: model is doing so well too, is that you guys
17:43
Speaker 2: are you guys are the boots on the ground people
17:46
Speaker 2: who are building, and you're creating access points. We talked
17:52
Speaker 2: about the process here, and I want to mention. I
17:56
Speaker 2: want to mention more about the policy side because we've
18:00
Speaker 2: kind of talked around it a little bit here, but
18:03
Speaker 2: there's a lot of conversations around policies that are trying
18:06
Speaker 2: to make it easier to build. And I was curious
18:10
Speaker 2: because you know, California has a couple of initiatives that
18:15
Speaker 2: are trying to make it easier. Do you want to
18:20
Speaker 2: talk about me the I believe it was the SB
18:24
Speaker 2: nine that went into effect a couple of years ago,
18:27
Speaker 2: Like when it came out, if you can mention what
18:31
Speaker 2: people were expecting it to do and how you're seeing
18:36
Speaker 2: that come into play and practice now.
18:41
Speaker 3: Yeah, I think that. You know, there's a couple really
18:44
Speaker 3: interesting pieces s behind which is a duplex law but
18:51
Speaker 3: also lost a lot split law. And what it did
18:55
Speaker 3: is it said, hey, you can come in and split
18:59
Speaker 3: any life down to a minimum of twelve hundred square
19:03
Speaker 3: feet and put a duplex on and sell it and great,
19:08
Speaker 3: we're going to create housing. Like that's a really interesting thing.
19:13
Speaker 3: It also said, though, that you could put a second
19:17
Speaker 3: single family or primary residence on any lie. Well, lots
19:23
Speaker 3: and lots of pushback from cities, lots of pushback from neighbors,
19:27
Speaker 3: just everybody thought that it was going to ruin their neighborhood. Well,
19:33
Speaker 3: because of some of the ways the laws were written,
19:36
Speaker 3: it didn't really go anywhere, like there was not much done,
19:40
Speaker 3: but ADU law did get like lots of wind behind
19:45
Speaker 3: the sails because people kind of interpreted it in a
19:48
Speaker 3: different way. They're like, oh, well, this is cool, I
19:50
Speaker 3: can do a house for grandma, Like that was the
19:53
Speaker 3: thought process that they had, and ultimately the ADU law
19:58
Speaker 3: has been a significantly more powerful law for actual housing creation. However,
20:05
Speaker 3: in the meantime, the state has come back and the
20:11
Speaker 3: we're a part now of a few lobby groups and
20:15
Speaker 3: that support these kinds of housing, and they've strengthened laws,
20:19
Speaker 3: They've gotten a lot better, and so now SB nine
20:23
Speaker 3: is an actual usable tool. There are a lot of
20:26
Speaker 3: ways cities were stopping it. Those ways have been buttoned
20:31
Speaker 3: up and now it's very usable. However, in the meantime,
20:35
Speaker 3: what's happened is the state came out with a more
20:39
Speaker 3: aggressive law called SB one one two three, and it's
20:44
Speaker 3: had a few different iterations, but the point is that
20:48
Speaker 3: now allows like SB nine for the lot split, but
20:52
Speaker 3: now you can do up to ten lot splits on
20:54
Speaker 3: the same lot. So basically nine had some rules that
21:01
Speaker 3: made a little bit more unwieldy. SB one one two
21:04
Speaker 3: three has eliminated a lot of those rules, but more
21:08
Speaker 3: importantly created a scenario where on that same parcel that
21:14
Speaker 3: I was talking to about before, that's fifteen thousand square feet. Well,
21:19
Speaker 3: now technically you can use SB nine and EIGHTYU laws
21:24
Speaker 3: on the first lot that was already existing, you can
21:28
Speaker 3: split it into ten more lots, so eleven lots totaled,
21:32
Speaker 3: you can end up with fourteen units on that same parcel.
21:36
Speaker 3: Because what the state has noticed is, yes, we have
21:40
Speaker 3: had some success with these laws, but it's not moving
21:43
Speaker 3: the needle. So in twenty twenty four, which is the
21:47
Speaker 3: last time I have numbers four, somebody in the state
21:51
Speaker 3: in a back room has the numbers for twenty five.
21:54
Speaker 3: But we're creating about thirty thousand extra units a year
22:00
Speaker 3: and that's not nothing like that is a meaningful amount
22:03
Speaker 3: of the housing creation of about one hundred thousand units
22:06
Speaker 3: per year. But we need like three hundred thousand units
22:09
Speaker 3: per year or a decade to solve the problem. So,
22:16
Speaker 3: you know, too little, too late is kind of the
22:18
Speaker 3: thought process of the state. It's like, hey, we have
22:21
Speaker 3: to be more aggressive, and we're we've been so concerned
22:26
Speaker 3: as a state about building to the discomfort of the
22:32
Speaker 3: people that already have, right, And it's like we don't
22:35
Speaker 3: want to piss off the neighbors, right, Like, okay, well
22:38
Speaker 3: that's a thing, but also how about all of their
22:41
Speaker 3: kids and their parents, and know all these other people
22:44
Speaker 3: that didn't enter into the market at the right time.
22:47
Speaker 3: They're all voters, they all pay taxes, they all care
22:50
Speaker 3: about security just like you do. And so are we
22:54
Speaker 3: going to secure the people that have already had theirs
22:56
Speaker 3: for a long time, or are we going to help
22:58
Speaker 3: people to achieve this American dream that's been promised. Right,
23:04
Speaker 3: we have this social contract that we've been given as
23:08
Speaker 3: a nation, like, yes, you work hard, you get safe house, right,
23:13
Speaker 3: Like that's the way that it works. And we haven't
23:16
Speaker 3: been delivering on that. And so the state has said
23:19
Speaker 3: enough is enough. Ten units additional separate parcels. We get
23:24
Speaker 3: to stop housing inflation for each of those families that
23:28
Speaker 3: get the ten new units. And so it's called the
23:32
Speaker 3: Starter Home Revitalization Act. So like that's actually what the
23:37
Speaker 3: real name of this bill is. And so that's what
23:42
Speaker 3: we're using mainly now. So SB nine was good, But
23:45
Speaker 3: SB one one two three, or the Starter Home Revitalization Act,
23:49
Speaker 3: is the thing that I believe changes housing, not just
23:52
Speaker 3: in California, but I think this is going to roll
23:55
Speaker 3: across the nation and start taking that zoning power back
23:59
Speaker 3: and put it into the hands of small developers to
24:03
Speaker 3: start building their communities.
24:05
Speaker 2: Again, I'm glad you mentioned both of those bills because
24:09
Speaker 2: many communities are still trying to go through the analysis
24:13
Speaker 2: to see if they even adopt this. So those two
24:16
Speaker 2: resources SB nine, SB one one two three are great
24:20
Speaker 2: for communities to try to point to how they don't
24:24
Speaker 2: even have to invent the wheel. They can just go
24:27
Speaker 2: out and find what you guys have done. And that
24:30
Speaker 2: translates because you know, you you talked about the social contract,
24:35
Speaker 2: but you know, communities are realizing that teachers, firefighters, amts, artists,
24:43
Speaker 2: single moms can't get in to the home ownership and
24:48
Speaker 2: yet they've seen the rising rents.
24:51
Speaker 3: And so.
24:53
Speaker 2: This leads me to the next piece of this is
24:56
Speaker 2: that so much of this is workforce housing that we're
25:00
Speaker 2: talking about. You know, we mentioned mom, we mentioned in laws,
25:03
Speaker 2: grainy flats, but so much of this as the potential
25:07
Speaker 2: to really change workforce housing too. And when you have
25:13
Speaker 2: people in mind who are you know, working in the
25:18
Speaker 2: various service opportunities, it's so often those households that are
25:25
Speaker 2: getting squeezed with the rising rent And is that how
25:31
Speaker 2: how does that look for you guys? I mean, does
25:33
Speaker 2: that translate into the people you're serving or people who
25:37
Speaker 2: you're marketing to comment on some of that?
25:40
Speaker 3: No, directly, it is this is workforce housing. That's exactly
25:47
Speaker 3: what it is. And the funny thing is, like you
25:51
Speaker 3: look in our market, a starting nurse is going to
25:55
Speaker 3: make like seventy thousand dollars a year, which is a
25:58
Speaker 3: great income, right, But in order to qualify to buy
26:02
Speaker 3: a house in the neighborhood close to whatever hospital that
26:06
Speaker 3: they're working at in our city, you need to make
26:10
Speaker 3: about one hundred and ninety thousand dollars a year. And
26:12
Speaker 3: so you can have a nurse living next door to
26:16
Speaker 3: another nurse that bought ten years before. So the nurse
26:19
Speaker 3: that bought ten years before, they have a payment of like,
26:23
Speaker 3: you know, nineteen hundred dollars a month, and their friend
26:27
Speaker 3: that's a nurse started ten years down the road later,
26:32
Speaker 3: they're renting a house, same house for thirty eight hundred
26:37
Speaker 3: dollars a month. It doesn't math like it, it's make
26:40
Speaker 3: any sense. And if they were to go and buy
26:41
Speaker 3: that house, their payment will be like forty five hundred
26:44
Speaker 3: dollars a month. And so it's not a question of
26:49
Speaker 3: what who belongs And I hear this and it just
26:53
Speaker 3: drives me nuts, But it's like, well, we don't want
26:56
Speaker 3: the wrong kind of people, and the wrong kind of
26:58
Speaker 3: people these are you, Like, it's other people like you
27:02
Speaker 3: that are trying to get into a stable housing situation.
27:06
Speaker 3: There's not other kind of people. You're the people like
27:09
Speaker 3: you're in the workforce, like you make our community go.
27:13
Speaker 3: And so your friends need a house, and if they
27:15
Speaker 3: didn't enter the market at the right time, if they
27:18
Speaker 3: moved out of state and moved back in. I just
27:22
Speaker 3: wrote I just finished the first draft of a book
27:27
Speaker 3: on the subject. It's called the Middle Housing Revolution, And
27:31
Speaker 3: in that I talk about a story where I was
27:34
Speaker 3: sitting down talking to my daughter's guidance counselor and her
27:40
Speaker 3: and principal almost the same amount of money. Both went
27:43
Speaker 3: to the school that my kid goes to, and she
27:47
Speaker 3: moved out of state, moved back in about four years ago.
27:50
Speaker 3: He has a house a block away and she commutes
27:53
Speaker 3: forty five minutes because she can't afford to be in
27:56
Speaker 3: the neighborhood. She teaches the school that she went to
27:59
Speaker 3: when she grew up, so does he, and their incomes
28:03
Speaker 3: are almost identical. Yet she can't afford to live in
28:09
Speaker 3: her community. And so these things have a real impact
28:13
Speaker 3: on us, Like how often does she get a stay
28:17
Speaker 3: late to be at the choir concert or to do
28:20
Speaker 3: you know? Like what are the things that have the
28:23
Speaker 3: actual social impact on the not just the way that
28:27
Speaker 3: she gets to live her life?
28:28
Speaker 2: Right?
28:28
Speaker 3: How I mean she could want to go home and
28:30
Speaker 3: watch Downton Abne Down to Nabbey or something like that.
28:34
Speaker 3: Who knows. But the point is like, she gets forty
28:38
Speaker 3: five minutes less of that each way every day, and
28:43
Speaker 3: she's not less educated, she's not less willing to serve,
28:47
Speaker 3: but she has a harder life. And the economy typically
28:54
Speaker 3: works in a way that we see that person's problem like, well,
28:57
Speaker 3: how do we solve it? Well, our laws locally have
29:02
Speaker 3: restricted us in a way that we can't actually solve it.
29:05
Speaker 3: If it cost me one hundred thousand dollars to build
29:08
Speaker 3: a house in that neighborhood that's now worth five hundred
29:12
Speaker 3: thousand dollars, Like I want to solve that problem every day, right,
29:16
Speaker 3: But if it makes it so difficult that I can't
29:19
Speaker 3: do that, then I have to choose to implement or
29:24
Speaker 3: use use money in a different way. And some of
29:29
Speaker 3: these faulse constraints that have been placed on our market
29:33
Speaker 3: by local governments essentially you know, and are the things
29:39
Speaker 3: that are boxing those people out.
29:42
Speaker 2: Let's pull the thread on that example you mentioned with
29:46
Speaker 2: the nurse, because it's important for communities to realize when
29:51
Speaker 2: this layer of housing is missing what that translates into.
29:56
Speaker 2: So for example, the nurse example, and I've heard this
30:00
Speaker 2: actually from a hospital that says, when we can't have
30:05
Speaker 2: nurses who can afford the apartments that are in close
30:08
Speaker 2: proximity to the hospital, we have turnover. We have more
30:14
Speaker 2: turnover because they're having to drive an hour hour and
30:17
Speaker 2: a half. We struggle to fully staff the shifts. We
30:25
Speaker 2: don't have access to people coming in for true surges
30:28
Speaker 2: of emergencies beyond shifts because people have the larger commutes
30:33
Speaker 2: because they're driving for farther out. So like just to
30:36
Speaker 2: kind of keep going on that these communities that have
30:40
Speaker 2: this layer of housing that's missing, it translates into more costs,
30:46
Speaker 2: more risks. Do you have more example, I mean, I
30:49
Speaker 2: don't want to sound like it's a scare tactic, but
30:52
Speaker 2: this actually does translate into real community problems. Do you
30:57
Speaker 2: have other examples that you could that you've seen.
31:02
Speaker 3: One hundred percent? You know, we so to the macro
31:08
Speaker 3: for the hospital, right, Like, it actually is more expensive
31:12
Speaker 3: because there's not housing options there because they have to
31:15
Speaker 3: have nurses that come in from outside what do they
31:20
Speaker 3: call that, temporary nurses or whatever, And so they'll come
31:26
Speaker 3: and live in an area for six months, stay in
31:29
Speaker 3: like a mid term rental, Like we've rented out a
31:32
Speaker 3: lot of people that are in that situation because they
31:36
Speaker 3: can't keep staffed, which is interesting because obviously that gets
31:42
Speaker 3: way more expensive. But then the other thing is, you know,
31:46
Speaker 3: in this book, I talk about the fact that we
31:51
Speaker 3: a couple of the units that we created were for
31:54
Speaker 3: my brother in law, who's my business partner, for his parents,
31:59
Speaker 3: and one of them is one bedroom and the other's
32:02
Speaker 3: a two bedroom, and they're very close to the hospital
32:06
Speaker 3: over here. And because those were created in a neighborhood
32:11
Speaker 3: that is attractive and nice, they filled up right away.
32:16
Speaker 3: And both of the renters in those spaces are nurses,
32:20
Speaker 3: and so they were previously commuting thirty to forty minutes
32:25
Speaker 3: and they are renters like in this scenario, I'm sure
32:28
Speaker 3: they'd love to be buyers, but the reality was, we
32:31
Speaker 3: put a product into a neighborhood that's very desirable and
32:36
Speaker 3: otherwise wouldn't have been there because you don't see one
32:39
Speaker 3: bedrooms in this million dollar neighborhood, right, but you do now,
32:43
Speaker 3: And so that's what it allows. And so you know,
32:48
Speaker 3: in those kind of people conversations, when they happen, it's
32:53
Speaker 3: like cool, those kind of people the nurse, right, Like,
32:56
Speaker 3: we don't say that about nurses. We all have this
32:59
Speaker 3: deep social work respect for them. However, what we don't
33:03
Speaker 3: typically have is this thought process that they should have
33:08
Speaker 3: the ability to live where we live. Right, if we
33:11
Speaker 3: live in this upper crust neighborhood, well, you know, they
33:16
Speaker 3: can save up and work hard and you know bs
33:20
Speaker 3: and so it is cool to see that. And back
33:25
Speaker 3: to that neuroplasticity concept, like once we see something a lot,
33:29
Speaker 3: it becomes normal to us. And so what I've seen
33:33
Speaker 3: in other very expensive markets where these kinds of laws
33:37
Speaker 3: have existed for a while is people people are concerned like, oh,
33:42
Speaker 3: that's going to tank my house value or whatever. Rights
33:45
Speaker 3: not real does doesn't have anything to do with your
33:49
Speaker 3: house value. And so but what it does do is
33:54
Speaker 3: it puts people into a position where now that nurse
33:59
Speaker 3: has a kid, like one of the nurses as kids
34:01
Speaker 3: that gets to go to school in a top notch school. Amazing, Right,
34:05
Speaker 3: that's super cool. But then the second thing is that
34:08
Speaker 3: nurse now has the ability to be at home so
34:11
Speaker 3: that they can coach soccer practice. Like that's a thing,
34:15
Speaker 3: and it's a thing that disappears when we're on the
34:19
Speaker 3: freeway for such a long period of time. Every day.
34:22
Speaker 3: We would love to coach soccer, but we can't be there. Like,
34:26
Speaker 3: these are the thoughts and these are the costs that
34:28
Speaker 3: come to our community when these kinds of housing products
34:33
Speaker 3: aren't available.
34:35
Speaker 2: You mentioned your book, you said, a middle housing revolution.
34:40
Speaker 2: Where can people find it? When's it coming out? Tell
34:44
Speaker 2: us more? Why did you Why did you write it? Like,
34:47
Speaker 2: just give us the give us the lowdown here.
34:50
Speaker 3: Yeah, well, so hopefully you can find it here in
34:55
Speaker 3: the near future. I have to find somebody to publish it.
34:58
Speaker 3: I'm not going to self publish because my real goal
35:04
Speaker 3: in creating this book is I want to be a
35:07
Speaker 3: part of this revolution that has already started, and that
35:11
Speaker 3: is the people in the main street taking back the
35:16
Speaker 3: power of housing. Like we have the ability to go
35:20
Speaker 3: out and create for the people that we love, the
35:23
Speaker 3: people that run and serve our communities. And my goal
35:27
Speaker 3: is to show government entities the positive impacts that these
35:34
Speaker 3: kinds of housing laws can have. I want to show
35:37
Speaker 3: entrepreneurs that the financial implications of creating this kind of
35:43
Speaker 3: housing are very good, Like you can make good money
35:47
Speaker 3: solving the problem for the people that are unseen and unheard,
35:53
Speaker 3: and I care deeply about that. For me, this is
35:58
Speaker 3: the first time in my career that I've been able
36:01
Speaker 3: to be a part of solving a problem that I
36:03
Speaker 3: deeply cared about. And we back to that concept of
36:09
Speaker 3: social contract, Like I believe that we have this social
36:13
Speaker 3: contract where we tell people you work hard, you can
36:18
Speaker 3: stabilize your own situation. And when I look at how
36:23
Speaker 3: these systems are misaligned, and this is a great solution
36:27
Speaker 3: to that, I just want to stand up on the
36:29
Speaker 3: top of a mountain and just scream it to everybody.
36:33
Speaker 3: And I could care if I make two dollars off
36:36
Speaker 3: of a book, but if we could get one hundred
36:40
Speaker 3: thousand or a million copies out there and let people
36:43
Speaker 3: see there is a viable solution to this problem, and
36:47
Speaker 3: it touches so many people's lives positively when we do this,
36:53
Speaker 3: Like we can start seeing the people that really need
36:55
Speaker 3: the housing. We're not giving them any gifts, Like they
36:59
Speaker 3: will be paying for their own house right, Like there
37:02
Speaker 3: doesn't need to be government subsidy to run the system.
37:06
Speaker 3: What we need to do is we need to look
37:08
Speaker 3: at what's broken and just fix it. We can do that,
37:12
Speaker 3: like our nation is capable of that. We are problem solvers.
37:17
Speaker 3: So the entrepreneurs that are on Main Street can go
37:21
Speaker 3: out and fix the problems for their friends, for their community,
37:25
Speaker 3: and the governments that are in charge of these things
37:29
Speaker 3: have the ability to enable them to do that. And
37:32
Speaker 3: so I want to convert as many people to this
37:36
Speaker 3: mission as possible, and that that's really the purpose of
37:42
Speaker 3: creating that book.
37:44
Speaker 2: Well, you've already started a momentum and a movement, so
37:48
Speaker 2: I think that that is the first one of the
37:50
Speaker 2: hardest pieces, and you've already started the evidence space analysis
37:56
Speaker 2: that it can work. So that's the next piece. You
37:59
Speaker 2: are getting there in an incremental way. It reminds me
38:04
Speaker 2: back you know, when people were actually taking the covered wagons,
38:10
Speaker 2: the trails and all the tools to build their housing
38:12
Speaker 2: once they found the lot, and it was you know,
38:16
Speaker 2: it was very very risky in certain parts of the country,
38:21
Speaker 2: and it was very very hard, but there was this
38:25
Speaker 2: core desire for people to take charge of their own housing,
38:30
Speaker 2: wasn't it Like it was a real fundamental belief. For sure,
38:33
Speaker 2: people wanted you know, they were farmers, they still wanted
38:36
Speaker 2: to take care of their housing and get that settled.
38:40
Speaker 2: You know, lots of other issues with how that happened,
38:43
Speaker 2: but I think the fundamental core is what you're talking
38:46
Speaker 2: about here, that people want the housing and people want
38:50
Speaker 2: to take the power or control and the ability to
38:56
Speaker 2: get that housing.
38:58
Speaker 3: Yeah. I agree. There there is so much in our
39:03
Speaker 3: society today where we feel helpless, right, And I love
39:10
Speaker 3: that analogy of the starfish like on the seashore, right,
39:14
Speaker 3: like where you see the guy throwing starfish back and
39:18
Speaker 3: they're like, oh, you can't save them all. Well, that's true,
39:21
Speaker 3: but I can save this one. And that thought process
39:25
Speaker 3: as that embodies like our generation, then what we get
39:30
Speaker 3: the opportunity to do is we need to say, hey,
39:33
Speaker 3: I see that everybody here just wants stability. That's what
39:39
Speaker 3: we want. That's what the American dream is supposed to
39:42
Speaker 3: be about. Like you work hard, you throw your soul
39:46
Speaker 3: into what you do, you serve everybody by doing that,
39:49
Speaker 3: and you're going to be secure in your position. We
39:52
Speaker 3: have safety and we can create that for our generation,
39:59
Speaker 3: and that that is what I think is very exciting.
40:03
Speaker 3: The thought process of doing something that pays well is good,
40:09
Speaker 3: Like the money needs to be there to justify the exertion,
40:15
Speaker 3: but at the same time, there is something so much
40:19
Speaker 3: more meaningful and powerful when what we do also gets
40:24
Speaker 3: to solve something that we deeply care about and that
40:28
Speaker 3: deeply serves other people's feeling of belonging, they're feeling of safety,
40:35
Speaker 3: and when we see this generation that has not been
40:39
Speaker 3: provided for in the last fifteen years, like that gets
40:44
Speaker 3: to accomplish all of the things. And so that's what
40:48
Speaker 3: really excites me. And I think that you're going to
40:50
Speaker 3: see some massive entrepreneurial ventures come out in the next
40:54
Speaker 3: five to ten years where people are going to be
40:58
Speaker 3: saying like Lenar, yeah, those guys, but there will be
41:02
Speaker 3: some massive creation that's going to happen for people that
41:07
Speaker 3: deeply need it, and that excites me.
41:10
Speaker 2: That's exactly what I was going to ask you with
41:12
Speaker 2: one hundred million dollars in assets, like, what is your
41:16
Speaker 2: wish list moving forward in the next five to ten years?
41:19
Speaker 2: Where do you want to be?
41:21
Speaker 3: So like, right now, we we're looking we're working on
41:30
Speaker 3: some AI solutions for other developers like us to compress
41:34
Speaker 3: the risk that it takes to get through this process
41:39
Speaker 3: and even the timeline. Our goal is to enable as
41:45
Speaker 3: many developers in the nation as possible. Right now, it's
41:49
Speaker 3: very specific to California, but we're we're looking to utilize
41:54
Speaker 3: this platform to move into other states that have laws
41:58
Speaker 3: that are applicable, and so we want to be building
42:02
Speaker 3: in as many states is will will allow this kind
42:08
Speaker 3: of housing creation. And really where we want to be
42:13
Speaker 3: is just empowering other people to solve this problem. We
42:16
Speaker 3: could never begin to solve a fraction of the problem,
42:20
Speaker 3: but that does not mean that we cannot be the
42:22
Speaker 3: people to start the avalanche. And that's our goal is
42:27
Speaker 3: to start this avalanche. And and so we want to
42:33
Speaker 3: talk to legislators, we want to talk to capital providers,
42:37
Speaker 3: we want to talk to, you know, people that are
42:40
Speaker 3: interested in solving this problem and give as much lenks
42:44
Speaker 3: to it as possible from a financial perspective. Like we
42:49
Speaker 3: have achieved the things that we thought were impossible for ourselves,
42:57
Speaker 3: that's not the biggest goal. The goal is how do
43:00
Speaker 3: we empower people to solve problems for others and in
43:06
Speaker 3: that process help them find satisfaction for themselves.
43:13
Speaker 2: Well, Jared, this has been a great conversation. We've learned
43:16
Speaker 2: more about how this microfill in housing works, what you're
43:22
Speaker 2: doing in southern California, how there is a solution that
43:27
Speaker 2: is possible. As difficult as some of those solutions may be,
43:31
Speaker 2: but there is a solution and so Jered having you
43:35
Speaker 2: walk through some of this has been just great. I
43:38
Speaker 2: hope that many of our listeners now dive in this
43:43
Speaker 2: with you as well. So again, thank you so much.
43:46
Speaker 2: I've been talking with Jared Jones, the co founder of
43:49
Speaker 2: Middle Housing Partners.
43:51
Speaker 3: Thank you.
43:52
Speaker 1: Thanks for listening to change Makers with Katie Gore. To
43:55
Speaker 1: find out more about Katie, go to quadel dot com.
43:59
Speaker 1: That's qu A d e l dot com. This has
44:03
Speaker 1: been a production of Forbes Books Radio