Here's the deal for the lack of decent mid-priced housing in the Ithaca, New York area.
tl;dr: poor economies of scale, large lot/low density zoning, labor shortage, NIMBY, no housing filtration, academic cycle leases.
- Large lot zoning is prevalent in surrounding areas that otherwise have sewer, water, and other utilities to support much denser development. This makes it expensive to subdivide land, because a builder would need more road and utility/infrastructure length to serve the same number of lots than if they were in the 'burbs of one of the Thruway cities. (For what it's worth, road construction standards in the region are lacking -- shoulders and ditches instead of curbs and storm drains, no sidewalks, etc.) Lot sizes and prices also make it hard to justify building smaller entry-level or mid-market houses.
- There's a lack of large or production homebuilders, where there would otherwise be economies of scale. It's one reason why there isn't much middle ground between high-end custom houses, and utilitarian Pennsylvania prefab and site built houses. Forget national homebuilders that can really take advantage of economies of scale. There's only one national building anywhere in the Buffalo / Rochester / Syracuse corridor -- Ryan, which targets "value-conscious" middle-income suburban homebuyers. Pulte, Lennar, D.R. Horton, Toll Brothers, etc won't even think about spec building in any of the Thruway cities, even though the housing market in Buffalo is increasingly hot — and increasingly expensive.
- Townie-oriented builders are all small mom & pop firms. They have limited financial resources, and can't risk building speculative housing for a non-student market. You might see an odd spec build house here and there, but you'll seldom see a subdivision with more than a few for sale.
- A local mom & pop home builder will also need a higher rate of return on investment to make up for financial risk and their low volume operation. A home builder in Syracuse will be looking for a 15% ROI. Here, for the middle end non-student market, they'll be looking for a lot more to make their numbers work.
- Population growth is just high enough to create a demand for quality housing, but also just below the threshold that piques the interest of larger production builders in Buffalo / Rochester / Syracuse / Elmira / etc. It's also why you don't see the same nice, new, amenity-filled apartment complexes that other communities have in abundance. Filling up a new market-rate, middle-end 200-unit complex or "fast casual" building, at prevailing rents, without targeting the student market, would take a long time.
- Building student and high-end custom housing, and sometimes income-qualified / LIHTC housing, is far more lucrative than building for the middle end. If you can make the same amount of money building $600K custom homes for specific clients as four or five $200K spec houses, you're going to focus on the $600K builds, as long as there's a market for them. And there is.
- There's a severe shortage of tradespeople and construction labor. A large project at Cornell or IC can take a huge chunk out of the local labor pool.
- The low vacancy rate in the for-sale and rental market makes older, low quality, and functionally obsolete housing competitive. Adding to that, many home buyers in the area have "rustic" tastes, and don't mind what they see as "patina", "character", or "charm". This means there's little incentive to update existing housing, especially if there's a bunch of well-off bohemian types who are more than willing to pay top dollar for houses that haven't seen a refresh since the Johnson administration. A side effect -- the few speculative new builds you'll see will often have a lower level of finish and improvements than what you'll see elsewhere -- basic builder grade kitchens/bathrooms, formica countertops, gravel driveways, thin vinyl siding, and so on. Why? Because with a low inventory of decent quality houses, and a lack of competition among home builders, it's as good as it's going to get. The mediocre becomes middle end. Even if buyers demanded better, they don't have much of a choice.
- Because construction of market rate housing for the townie market happens at a glacial pace, so does the process of housing filtration, where households with smaller housing budgets move into older housing left behind by households who are upgrading to newer homes. Making matters worse, this area has never really had an equivalent to a Cheektowaga or Elmira Heights -- lower-middle class suburbs with a big supply of smaller but still decent entry-level houses that were built after WWII. New luxury apartment buildings targeting student tenants free up older housing units, but the units that hit the market are more likely to be at the bottom end of the student rental market -- old-school "college ghetto" units in student-heavy neighborhoods.
- Missing middle units -- owner-occupied townhouses, duplexes (paired houses) and triplexes, condominiums, and the like -- are not as common here as in peer and larger cities. Blame it on old zoning codes (which some communities are slowly updating), and the mom & pop builders that don't have the means to build more than a few units at a time.
- Academic cycle leases aren't just common here; they're the norm. The result is something like a Montreal-style "moving day". It's very expensive to break a lease if you're moving between August and June of the following year. (I had to pay about $5,000 extra for my house, if you consider lost rental deposits and lease breaking penalties.)
- Miscellaneous other things: lack of on-campus housing at one of the major universities in town numbers don’t work for teardowns of functionally obsolete housing in the city, city homeowners hold on to adjacent vacant lots instead of selling them for housing development, NIMBY and the lack of certainty in the zoning / review / entitlements process that it brings, low salaries for non-academic jobs (captive labor pool of academician spouses and people who choose to Ithaca for the lifestyle), no local factories making prefab housing (which is more common in the area than the Thruway cities). I didn’t mention high property taxes because it’s an issue everywhere in Upstate New York.
Some
very quick-and-dirty numbers: let's say you're building new, and your budget is the region's average home price of $250K - $300K. If a typical 0.5 - 1.0 acre building lot on a subdivision street (not a county road) with sewer and water costs $80K, and construction costs are $125 to $150/square foot at the very least (here, that gets you basic builder grade or a utilitarian prefab), the end result is a 1,400 square foot house. One small builder is planning a cottage court of 1,100 - 2,100 square feet prefab houses "from the upper $200s to the low $400s".
Let's compare it to Buffalo. A 75 x 120 lot (9,000 square feet, considered large by Buffalo standards) in a new subdivision in a middle class second ring suburb -- on a street with sidewalks, curbs, and street trees, not ditches and shoulders -- will set you back $40K. $125/square foot gets you a site built house with move-up finishings, thanks to competition and economies of scale. Your $250K would result in a 1,680 square foot house -- one with a basement, a
concrete driveway (the norm in Erie County), and basic landscaping.
There are local home builders that do site-built new builds in the $200K-$300K range which (often) don't look like glorified trailers. However, they target the hippie / permie / eco-conscious market. Think
Tiny Timbers, or the "
Appalachian folk contemporary" style that you don't see much outside of the area. The houses will be much smaller than new builds in the Thruway metros for the same price, they won't have basements, and they'll have odd "features" -- wood heating, 7' ceilings throughout, weird floor plans, cladding designed to take on a hard weatherbeaten look in a few years, etc.