_John Philip Mason is a residential appraiser with 20 years experience and covers the Hudson Valley region of New York. He’s a good friend and a true professional who provides unique insight to appraisal issues of the day. Here is his inaugural weekly post called Solid Masonry._

_Jonathan Miller_

This past Sunday the New York Times ran an article [Talk About Renting a Hole in the Wall](http://www.nytimes.com/2006/02/03/nyregion/03mattress.html?_r=2&oref=slogin&pagewanted=print) in which a group of architectural students stumble upon an experiment which reveals just how hot, or desperate, the New York City housing market really is. Up late one night (perhaps a little too late) the three students amuse themselves by stuffing a mattress into a transom over a bedroom doorway. Having decided it was “not half bad” in terms of comfort; one of them posts an ad on Craigslist to see if anyone else would find interest in the “elevated mattress” at $35. In a city where most of us think we’ve seen it all, it should be no surprise that about a dozen people responded to the ad. While the students never followed through on actually renting out the space, they are clearly on to something.

And like others in real estate, I’ve seen my share of “creative” housing, including:

* A storefront with 9-10 mattresses laid out on the floor of the basement and offered as partial compensation to the workers of the restaurant above. While I was never given a dollar amount for the “compensation”, I was told that use of the single toilet and sink at one end of the basement, which was shared by all, was included.
* While inspecting a house in a nice suburban neighborhood, I opened a hall closet (about 3 feet deep and 8 feet long), only to find a few clothes hanging on the rod. Upon looking down I spotted a twin size mattress on the floor, to which the owner smiled and said she ‘ran out of bedrooms for her kids’.
* And my personal favorite was a single family home divided into many small rooms. Each room had a bed and most beds were occupied. The owner boasted how some of his tenants had “sublet” their rooms, in 12 hour shifts. While there was a small surcharge to these enterprising individuals (supposedly for the added use of the common kitchen and bathrooms, the landlord was proud that of his tenants had found a way to reduce their own weekly rents.

To be clear, we never completed any of these appraisal assignments, as the loan was dead once the lender realized there was illegal use of the properties. (Or more likely, once they realized we were not willing to overlook the illegal use.)

But this brings the meaning of “highest and best use” to a whole new level. Let’s face it, the motivation here is much higher rates of return, legal or otherwise. As and example, an apartment can be rented at $1,800 per month to one tenant, or it can also be rented at $3,225 per month to six individuals ($125 per week x 6 people x 4.3 weeks per month = $3,225). It makes sense some landlords are willing to take greater risks in return for equally greater rates of return, especially in light of the high price of investment properties, when compared to the low rates of return on investment under a conventional (legal) rental analysis.

The fact is there is an urgent need for truly affordable housing, no matter how unsafe or unreasonable the conditions might be. When the incomes of poor individuals and families are unable to keep pace with legal rents, the market has demonstrated they are clearly willing to accept less in return. Much less! Wouldn’t a city like New York be better off promoting the development of safe and clean SRO’s, rather than ignoring such sheer demand? Shouldn’t there be consideration for the development of smaller units, even if they don’t meet current “standards”? I’m talking about building new complexes with single rooms, no bigger than 5′ x 10′, with small Pullman style kitchens and maybe a toilet in a closet.

_At some point we need to stop debating about what people want and start providing them what they need. If three architectural students in a late evening lark can create such a simple test to demonstrate how desperate the housing crisis is, shouldn’t we as a society rise up to the challenge and meet such a glaring need?_