Rural Studio’s 20K Homes Reveal the Systemic Problems Behind Affordable Housing

"I don’t think we had any idea of the complexities we were getting ourselves into when we started," admits Rusty Smith, associate director of Rural Studio. "To be brutally honest, we were really naive relative to the issues behind home affordability and how dynamic and systemic they are. We’ve learned a lot through the project over the past 13 years."

That project is Rural Studio’s 20K Initiative, a research program where Auburn University faculty and architecture students tackle the United States’ affordable housing crisis. Launched in 2005, the 20K Initiative began with the creation of $20,000 homes for an impoverished Alabama area.

Today, they’re looking to bring their 20K Initiative designs and research to the national scale. Inspired by their potential at creating lasting solutions for home affordability, we’re taking a look at the evolution of the 20K Initiative and their next steps.

What is Rural Studio?

Understanding the 20K Initiative begins with Rural Studio. Launched in 1993 as one of several "field study" student programs under Auburn University’s College of Architecture, Design and Construction, Rural Studio follows a philosophy that everyone, both rich and poor, deserves good design. 

Built around community service learning and the university’s land grant heritage, Rural Studio immerses approximately 45 students a year in the tiny Alabama town of Newbern (population 186) for anywhere from a semester to a year or more.

Students work with a five-county service population to design, develop, and construct affordable housing and public infrastructure. To date, Rural Studio has constructed over 200 beautiful, site-specific buildings and gifted the homes to clients who might not otherwise been able to provide a home for themselves.

How the 20K Initiative Got Started

In 2005, Rural Studio asked its students to design a $20,000 home—with roughly $12,000 allocated for materials and $8,000 for labor and profit—in a challenge that grew into the 20K Project: a student-led, iterative research project aiming to bring beautiful, affordable homes to anyone who needs them. 

"The $20,000 came from some pretty simplistic math," says Rusty, who also serves as Auburn University’s Gresham Professor and associate chair of the architecture program. "We looked at the typical mortgage that an average homeowner within our service population could afford, which conceptually, was $20,000."

The first homes that Rural Studio built 13 years ago in Western Alabama met their $20,000 cost model and metrics for good, dignified design. Over time, however, that $20,000 objective became less of a target and more a touchstone for low-cost, innovative construction.

"In the beginning, the $20,000 was used to show students that there was more to a house than just the cost of materials," says Rusty, adding that the 20K houses typically replaced sub-standard homes that might already have a driveway and other connections in place. "But a lot has changed. For example, the $12,500 cost for materials used in the first 20K house in 2005 has more than doubled in price today."

Yet, it’s not only increasing material costs that have transformed Rural Studio’s approach to affordable housing.

The Complexity of Affordable Housing

With nearly 30 homes completed, the 20K Initiative has amassed a wealth of knowledge on designing, developing, and constructing desirable yet low-cost homes. However, they’ve also realized that the problem of affordable housing is more complex than originally thought.

Rusty explains: "The issues of home affordability are not brick and mortar problems. You cannot cure all the ills of home affordability through design because a lot of it is systemic, like zoning. Architects can’t solve any of these kinds of issues because we are not in charge of them. But what architects can do is make invisible things visible."

The issues of home affordability are not brick and mortar problems. You cannot cure all the ills of home affordability through design because a lot of it is systemic, like zoning. Architects can’t solve any of these kinds of issues because we are not in charge of them. But what architects can do is make invisible things visible.

—Rusty Smith

Today, the 20K Initiative has shifted the discussion from the cost of a home to the cost of homeownership, from purchase to post-occupancy maintenance. To that end, they’ve partnered with public and private organizations, including the likes of Fannie Mae, USDA, Department of Energy, Habitat for Humanity, and more.

"We’re trying to solve the lack of well-designed, high-performing single-family homes that can be titled as real property," Rusty continues. "It’s a problem because we commonly understand homeownership as the cornerstone of financial security in the U.S.

"The obstacles to affordable homeownership are rooted in a complex ecosystem of how we procure single-family homes. It includes what we call ‘first costs’—like mortgages, permitting, and zoning—as well as ‘second costs,’ which include things like insurance, energy consumption, and maintenance. How we procure, own, and maintain homes is extraordinarily complex."

The Keys to Sustainable Homeownership

Rather than focus on a home’s total sum cost, the 20K team is framing costs in terms of what their clients are most concerned about: monthly payments. 

"By working with our secondary mortgage partners, we know that for every dollar added to the mortgage, you get $200 worth of construction," says Rusty. "If we connect the issues between first and second costs, we can produce a better performing house that’s still affordable."

Rusty explains with an example: Say the team wanted to build an energy-efficient home for a client who can only afford a $20,000 mortgage. But if the energy-efficient upgrades cost $5,000, thus increasing the mortgage to $25,000, doesn’t that make the home unaffordable?

Not if second costs, like energy, are considered. If the $5,000 of added energy-efficient construction creates $25 of monthly energy savings, that money can be reinvested into the mortgage to pay off the extra $5,000 construction fee thanks to the aforementioned 1:200 mortgage financing to construction cost ratio.

Not only do the energy-efficient upgrades smooth out fluctuations in energy bills, but a higher performance home that also protects the mortgager’s investment—a win-win situation.

The real problem with affordability, he adds, isn’t that the clients can’t afford the mortgage. 

Based on research on their service population, the team found four main reasons why someone might lose their home: 

1. wild fluctuations in energy costs that create unpredictable monthly burdens
2. unexpected maintenance
3. unexpected health-related events
4. unexpected disruptions in their income due to job loss or reduced hours.
   

This research has informed the 20K house designs, which emphasize energy efficiency, resiliency, and human health. The team also wants the homebuilding process to contribute to the local economy, from procurement of local labor to materials. Post-occupancy education is also a big part of their plan to ensure the homes’ long-term sustainability.

From 20K Project to 20K Product

With over a decade of experience in Western Alabama, the 20K Initiative is preparing to expand the 20K model to rural regions around the U.S. Yet while the goal is to make the houses and research accessible to all—the venture is strictly not-for-profit—the team is moving forward carefully.

"The 20K Product Line has multiple components," explains Rusty. "In addition to the house, we’ll offer a comprehensive instruction manual that also covers the procurement model, which is how the house is delivered. All of these can depend heavily on context including environmental, social, historical, and economical. Even if one of our houses can hold up weather-wise in another state, it might not work in a sociocultural context."

Currently, the 20K Product Line has four housing models ready for implementation with the help of fulfillment partners in undisclosed locations outside Rural Studio’s service community.

Using student-led research and data collected on post-occupancy 20K houses, the 20K Initiative is currently developing one- and two-bedroom models optimized for passive comfort and designed (at a minimum) to meet current International Residential Code, while others may meet higher performance levels like Passive House and Zero Ready.

The team will collaborate with local entities to develop region-specific homes for other areas of the U.S. Meanwhile, the 20K Initiative will also work with their federal-level partners to address larger systemic issues of affordability, such as zoning, which in certain areas would not allow a 20K House to be built because of the minimum square footage requirements.

"We are working towards revealing more information, but we’re doing it quietly because we don’t want there to be inaccurate information," says Rusty. "But it is our goal to eventually provide the numbers to offer helpful information to those who need it."

While specific information about the cost and development of these first 20K Product Line homes won’t be revealed until next year, the 20K team recently shared news of a major partnership with the government-backed mortgage giant Fannie Mae.

We’ve been working in Alabama, but there are no borders in what we do.

—Rusty Smith 

Under the Housing and Economic Reform Act of 2008, Fannie Mae has been required to improve access to mortgage financing and create affordable housing opportunities in underserved markets, including rural regions, in their "Duty to Serve" plans.

As a result, the 20K Product Line will have access to mortgage financing for their low-cost houses—something that was virtually impossible to secure previously.

"We’ve been working in Alabama, but there are no borders in what we do," says Rusty. "So the goal is that if the products and services we develop are useful, we want anyone who wants them to have them."

If you’d like to learn more about Rural Studio, you can connect with them online and follow the Rural Studio blog. Or, to donate to the research, visit www.supportruralstudio.com.