Most developers assume the housing crisis is about supply. Jesse Russell and Ryan Andrews of Hiatus Homes see it differently: it's about designing for households that most developers overlook. One to two-person households represent the largest and fastest-growing demographic in America, yet they're the least served by new construction. Based in Bend, Oregon, Hiatus Homes builds 500-1,200 square foot homes specifically for this market, and since 2020, they've raised $8M from 60 local investors.
Their Hiatus Ninth project demonstrates how small-scale infill development works in practice. On a half-acre lot that once held a single home, they subdivided the property into nine lots and built "twinhomes"—a main unit with an attached ADU that functions as both a primary residence and rental property. This approach allows middle-income buyers (80-120% AMI) to afford homeownership while generating rental income, using financing structures that treat the combined units as a primary residence rather than an investment property.
This conversation also explores the policy changes enabling this housing type, the three-stage capitalization strategy they use, the construction process with guaranteed-price builders, and the barriers still preventing small-scale development from scaling nationally. Jesse and Ryan offer practical advice for developers navigating zoning codes, engaging local government, and creating housing that serves workforce needs while remaining financially viable.
Episode Outline
(03:59) Capital raising through the JOBS Act and community-based investors
(08:52) Defining small-scale development and the housing types that qualify
(13:49) Hiatus Ninth project overview: subdividing one lot into nine twin homes
(21:06) Design and construction process with guaranteed-price builders
(23:44) Pricing strategy and the importance of getting buyers into the physical space
(27:50) Three-stage financing structures and end-user mortgages
(33:23) How Freddie Mac allows rental income to offset mortgage qualification
(39:47) Inventory challenges and building permit slowdowns
(43:29) Barriers to scaling small-scale developments
(53:50) How developers can engage local government and advocate for zoning reform
Additional Resources
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