Broad Appeal Specialty Housing (BASH)

Overview

Broad Appeal Specialty Housing (BASH) is a business strategy whereby developers create homes with features that are lifechanging to a specific group of people, yet are built in ways that still appeal to a general audience.

BASH is a mutually beneficial way to help alleviate problems caused by increasingly unaffordable homeownership costs. The ultimate goal of BASH is to create a healthy, diverse rental market in which most people can find and afford rental housing that they would prefer over homeownership.

Problem

Housing costs are rising faster than wages across the globe. In the United States in 2022, home prices were the most unaffordable they have been in modern history and continue to hover near those levels. Individual homeownership is falling and corporate homeownership is skyrocketing. The situation is similar or worse in much of the Western world.

No current indicators suggest the situation will improve any time soon. On the contrary, until larger external forces change their direction, these trends will most likely continue for the foreseeable future.

For example, the work-from-home trend accelerated by the COVID-19 pandemic means that a commercial real estate crash is all but inevitable; however, this will not magically solve the housing crisis. Turning office buildings into apartments is so inefficiently expensive that few will be converted, and of those, even fewer will be affordable.

Ultimately, as more areas of the world become uninhabitable, or at least uninsurable, regional housing supply will shrink as developed areas are abandoned without immediate replacement.

People are suffering now, but most indicators suggest that without a major intervention, these problems will only get worse, particularly for younger people. Millennials, Gen Z, and later generations will likely never catch up to their predecessors. More and more will rent for their entire lives without ever owning a home.

As economic conditions deteriorate, marriage rates and birth rates will continue to decline, increasing isolation. Depression, already at record levels among young people, will worsen. On top of these stressors, they will keep paying an increasing share of income to rent smaller and less satisfying homes. Vulnerable groups, like people with disabilities, will be disproportionately affected, and even fewer people with special housing needs will have those needs met.

As bad as these current trends are for most people, they are even more devastating for animals. When people have less disposable income, they are less likely to have a pet. When people live in smaller homes, they are also less likely to have a pet. And when people rent instead of owning their home, they are far less likely to have a pet, especially when sharing that home with others.

All these factors compounding will result in surplus animals being put to death by the millions, which will be made all the more tragic by the fact that millions of people would have wanted to give them homes had they been able to do so.

This is what will likely happen soon if we do not change course, but there is still a chance to write a better future.

Theory

We can do better.

While it may be inevitable that more people rent for life, there is no immutable law dictating that renters must be unhappy about their living situation, nor that homeownership is the only path to life satisfaction.

Despite the currently bleak outlook, this confluence of modern trends has also created an opportunity for developers to build a new kind of home that better matches the needs of the current market.

Broad Appeal Specialty Housing (BASH) provides a scenario where all parties win: Housing providers, tenants, and society at large can all benefit from homes that seem like an average value to most people, but that niche groups like so much that some would prefer renting them to owning a regular home.

BASH benefits housing providers.

Housing providers can earn higher profit margins with BASH than with traditional housing complexes. If housing providers successfully create homes that enough people prefer to homeownership, they can reap financial rewards that exceed the incremental costs of building and maintaining the specialty features required for BASH.

Furthermore, BASH works entirely within the confines of capitalism and existing laws. The primary incentive is increased profitability, with first movers gaining outsized advantages in their markets.

BASH provides a USP.

There are so many similar housing products available that most housing complexes have no distinct market position that is discernable to potential tenants. Through specialty features, BASH provides a cost-effective, high-value unique selling proposition in a highly homogeneous market where it is next to impossible to stand out.

A combination of recent trends—including more people working from home, decreased loyalty to employers, lower marriage and birth rates, increased isolation and diminished local ties—has resulted in a new metatrend: People are more mobile than ever before. Applied to the housing market, this means that more people can and will move to a new home or even a new area if given a compelling reason to do so.

Specialty housing can provide that compelling reason—a unique value proposition that makes those in a niche audience prefer one housing development over all other competitors, regardless of other comparative differences.

BASH broadens the market.

Typical housing products appeal to only one group—the General Market—which is limited to those who have already decided to move to that general area. As they lack a USP, their housing products are compared against all others in the area by the attributes common to all housing, e.g., price, location, size, and basic amenities. For tenants who don’t care about their specialty features, BASH products compete on a level playing field against other local housing products.

However, BASH products also appeal to an entirely different group—the Specialty Market—those who do value the specialty features. To this audience, BASH provides an exceptional value that puts it far ahead of the competition, particularly among those who have already decided to move to the area. However, BASH can also appeal to those in the Specialty Market who have not already decided to move to the area, but would move for the benefits of the specialty features—something no typical housing development could ever hope to do. In times of high demand in an area, pursuing this group would not be necessary; however, during leaner times, this larger addressable market ensures that BASH could maintain high occupancy even when market conditions cause local competitors to falter.

BASH lowers advertising costs.

Until recently, reaching such a niche target audience for specialty housing would have been cost-prohibitive if not impossible. But today, advertising to individuals based on detailed personal criteria is easier than ever, and generally more cost-effective than mass media advertising. This can reduce overall marketing costs since housing property managers can focus on effective, highly-targeted communication rather than trying to reach a general audience crowded with messages from every other housing provider.

Due to the rise of social media, niche groups self-organize and communicate more than ever before. Advertising to these groups is typically inexpensive, and word-of-mouth advertising within these niche groups would reduce marketing costs even more.

BASH lowers development costs.

BASH can be built for the same price as or even less than typical housing complexes.

First, because BASH does not rely on only the General Market for tenants, it does not need expensive features such as swimming pools to compete for the segment of that market that values such amenities. The amount saved from not building or maintaining such common features—which are often underutilized—can partially or even completely offset the cost in specialty features that will set the property apart.

Even more impactful, however, is the fact that to the Specialty Market, the right features are valued more than extra square footage, which means that BASH can make smaller homes appealing and viable in a market that would otherwise not support it. This approach limits the appeal to the General Market, but in an area with sufficient demand from the Specialty Market, this can have the largest impact of all on profitability by reducing land and building costs while allowing more units to be built.

BASH increases tenant satisfaction.

Compared to typical housing products, people feel an appreciation for, if not a connection to, a home built around what’s most important to them in their lives.

When tenants enthusiastically enjoy where they live and view it as their home rather than just a place to stay, their behavior changes. The most valuable difference a change in attitude toward renting from a short-term to a long-term perspective.

The best specialty features will tangibly improve tenants’ lives and enable positive routines not otherwise possible. Once people get accustomed to an upgraded lifestyle they know they couldn’t have with a typical home, they won’t want to leave.

Those who view their home as an exclusive asset they do not want to lose will take better care of their home, complain less, pay their rent on time more often, and most importantly, will live there longer.

Less turnover means fewer evictions, less repair and cleaning costs, lower overall property management costs, and, of course, less lost revenue from vacancies. Because of high transaction costs and the impact of zeros on numerical averages, it does not take a large reduction in turnover to create a large increase in profit, particularly because turnover and vacancy costs come directly from marginal profit.

Related Concepts

Co-housing

The co-housing concept, first introduced in Denmark in 1967, describes a collection of privately-owned homes connected by a shared space, which has resources everyone can use.

The BASH model shares several characteristics with co-housing and aims to recreate its main advantages.

However, key differences make BASH compatible with modern capitalism:

• BASH caters to more specialized interests...
• ...while at the same time, appealing to the general housing market.
• BASH is run by a company rather than self-governed, which means...
• BASH can be rental housing, rather than an HOA or co-op for owners only, making it widely accessible and easy to try without a large commitment.