Posts filed under ‘Housing Trends’

Underlying Factors In the Housing Affordability Policy Debate

Ken Szymanski, the Executive Director of the Greater Charlotte Apartment Association, has written an outstanding piece on the underlying factors contributing to the housing debate in Charlotte, and many of them apply to us here in the Triad. Some key points are excerpted below, but you really should read the full piece here.

  • Moderate-, middle-, and upper-income households are served perfectly well by the dynamics of the marketplace. But low-income households cannot be served by the marketplace because their buying power is too low. That fact always has and always will generate social and political reactions, because those households are cost-burdened and have to deal with problems of housing quality and overcrowding…
  • At all levels of government—federal, state, and local—for many decades the political will has generally been lacking to materially increase this subsidy coverage of 25 percent. To quote Joseph Califano, a Cabinet secretary under President Jimmy Carter, “You can only go ‘so far’ at redistributing wealth.” We have not seen the political will to spend the money that would increase this materially. Regardless of who the HUD secretary was or whether the person in the White House was an “R” or a “D,” the appetite of elected or appointed officials—or the general public—is not there to go much over 25 percent…
  • State government has a role.  The N.C. Housing Finance Agency has been the state administrator of the federal Low Income Housing Tax Credit program.  The federal tax credit program was created in 1986 and generally aims to house those whose income is at or below 60 percent of the area median income level. 
  • The federal government has a role. Formerly, the role of the federal government was to fund public housing and provide below-market interest rate mortgages for multifamily rental housing. The role has been substantially diminished in recent years…
  • Inclusionary policy for new development/mixed-income housing has not attracted developers. Nearly three years ago, the Charlotte City Council approved a voluntary affordable housing “density bonus” for developers. If a developer wanted to build in affluent areas, the city would allow it to build extra units if it included some apartments or homes for low-income residents. But no developer has participated in the program, and the city may be starting over. A number of misconceptions underlie the city’s current inclusionary housing policy, including: a misunderstanding of the importance of return on cost in development feasibility; an overestimation of economies of scale in construction; a stereotype that private developers want to discriminate against poor people.

  • “Source of Income” civil rights issue. Somewhat akin to the inclusionary policy for new development are calls to mandate the acceptance of Section 8 (housing choice) vouchers in existing communities. Some advocates are attempting to make the market-rate rental sector shoulder a disproportionate burden of the city’s affordable housing crisis by making it “discriminatory” for a housing provider to elect not to participate in the voluntary Section 8 program. Making Section 8 voucher administration more market-like, not passing a state “source of income” statute, is the proper way to improve the workability of the federal government’s major housing assistance program.
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February 19, 2016 at 3:07 pm 1 comment

NC School Districts Providing Apartments for Teachers

Several school districts in North Carolina have gotten into the apartment business to help provide housing for their teachers:

Thompson’s apartment complex is called Hertford Pointe, and it was built specifically to house teachers for Hertford County schools, a rural district in the northeastern part of the state. A local foundation called Partners for Hertford County Schools took out a zero-interest loan from the State Employees Credit Union to build Hertford Pointe in 2006. The rent teachers pay to live there will eventually pay back that loan. Thompson pays $625 a month for her two-bedroom unit, plus a pet fee…

James Eure led the school system’s foundation during the financing and construction of the apartments. He says before Hertford Pointe, there weren’t enough apartments in the area for Hertford’s teachers.

“When we started doing a study in Hertford County we found out that there was only about 15 apartments for teachers—with the salaries that the teachers made—[that they] could live in,” Eure explained…

Hertford County schools is one of three rural districts that has or is planning to build teacher apartments because of a lack of housing. Hoke County schools opened teacher apartments in 2013, and Richmond County schools is planning one as well.

Meanwhile in places like Asheville and Dare County the school districts are developing apartments to try and provide housing that is affordable for teachers:

In urban districts, building housing is more about affordability. Pam Baldwin is superintendent for Asheville City Schools, where a new teacher complex is in the works because of high housing costs…

Dare County, where the resort-oriented housing was too expensive for most teachers, built affordable teacher complexes in 2008 and 2011. Dare, Asheville and Buncombe are among a growing number of school districts across the country, butespecially in L.A. and Silicon Valley, that are building teacher apartments because of high housing costs and relatively low teacher salaries.

October 8, 2015 at 8:52 pm 1 comment

Housing Affordability a Growing Issue

According to a new study on housing affordability the combination of stagnant wage growth and accelerated rent growth is likely going to result in an increase in households that spend more than 50% of their incomes on rent. From a story in Bloomberg News:

The number of U.S. households that spend at least half their income on rent—the “severely cost-burdened,” in the lingo of housing experts—could increase 25 percent to 14.8 million over the next decade. More than 1 million households headed by Hispanics and more than 1 million headed by the elderly could pass into those ranks. Households shouldn’t spend more than 30 percent of income on housing, by the general rule of thumb…

There were 11.2 million severely burdened renter households in 2013, competing for 7.3 million units affordable to them, the report said. If rents continue to rise faster than wages, the number of households spending more than half their income on rent will rise, too. Wages grew 0.2 percent in the second quarter of this year, the slowest pace since 1982.

“The economy alone is not going to solve this problem,” said Andrew Jakabovics, senior director of research at Enterprise Community Partners, in a conference call to discuss the findings. “It brings us back to the need to expand affordable housing,”

September 22, 2015 at 4:47 pm Leave a comment

Two Large SFH Rental Home Providers Considering Merger

Two large single-family rental home providers are considering merging, yet another indication that the rental market isn’t cooling off any time soon:

Two big owners of single-family rental homes said Monday they have agreed to merge, a bet that rents will keep rising and homes will remain difficult for many Americans to buy.

Starwood Waypoint Residential Trust, a publicly traded real-estate investment trust run by Barry Sternlicht, the longtime real-estate investor who is Starwood Capital Group’s chief executive, will combine with closely held Colony American Homes Inc. in a deal that values Colony at about $1.5 billion based on Starwood Waypoint’s closing share price Friday. The Wall Street Journal had reported the deal earlier Monday, citing people familiar with the talks…

The two companies own a combined total of more than 30,000 homes valued at nearly $8 billion. Messrs. Sternlicht and Barrack were part of the rush by big investors to buy foreclosed homes in bulk, often sight unseen and at steep discounts, after the U.S. housing market collapsed…

The proposed merger of Starwood Waypoint and Colony is a bet that the percentage of Americans who own homes will remain unusually low. While the foreclosure crisis has receded, toughened lending standards have pushed millions of Americans out of the homebuying market…

The U.S. homeownership rate is at its lowest level in nearly 50 years, falling to 63.5% in the second quarter, according to the Commerce Department.

In contrast, single-family rentals now add up to 13% of overall housing stock, up from 9% in 2005, according to a report by Moody’s Analytics.

September 22, 2015 at 1:46 pm Leave a comment

Office Parks Reimagined As Walkable Communities

Developers are beginning to see suburban office parks as an opportunity to create urban-style communities. From the Wall Street Journal:

The latest example is in Minnetonka, Minn., a suburb of Minneapolis. There, Roers Investments LLC and CPM Cos. want to demolish two vacant warehouses to build a 274-unit luxury-apartment project in the middle of the 600-acre Opus II Business Park.

The $62 million development, which will include a fitness center, rooftop patio, fire pit and underground, heated parking, will feature apartments with monthly rents that range from $1,155 for a studio to $2,520 for a two-bedroom unit.

Adding apartments to corporate parks has numerous advantages for developers, according to Maureen McAvey, a senior resident fellow at the Urban Land Institute in Washington. First, most corporate parks are owned by a single entity, making it easier for developers to aggregate the parcels needed to build. With land increasingly scarce in urban and suburban locations, business parks have an abundance of underused space. Corporate parks also usually have easy access to major highways and mass transit, as well as infrastructure such as roads and utilities, which make redevelopment easier and less expensive.

And converting corporate parks into walkable communities helps increase the property value:

Walkability adds value, even to commercial properties. According to data firm Real Capital Analytics, prices for properties in central business districts have risen 125% over the past decade, but suburban properties that are also considered highly walkable are up 43%. Comparatively, prices are up just 21% to 22% for properties in suburban locations that are somewhat walkable or car-dependent.

September 14, 2015 at 1:11 pm Leave a comment

Miami Using EB-5 Visa Program to Finance Affordable Housing Development

The city of Miam, FL is taking a creative approach to addressing its shortage of affordable housing. They are tapping the EB-5 visa program to attract foreign development dollars:

The city will arrange for selected developments to be partially funded by a federal visa program known as EB-5, which grants green cards to foreigners who invest at least $500,000 in businesses or construction projects that create American jobs. The overwhelming majority of EB-5 investors are individuals from China eager to obtain U.S. residency…

Businesses seeking EB-5 funds typically contact middlemen—often lawyers—who run what are known as regional centers, which work with brokers in China and other countries to recruit investors, pool their investing dollars and funnel the money, often in the form of low-cost financing, to the businesses. The regional centers are paid a fee based on the amount of money they raise.

In the past year, Miami and a few other governments decided to create their own EB-5 regional centers, which allows them to select projects to help finance what would benefit the local community, charge a lower fee to the businesses and, in some cases, use the fees to supplement services such as police and firefighters…

Miami officials said they decided to start a regional center mainly to tackle its lack of affordable housing. According to an analysis prepared for The Wall Street Journal by the University of Florida’s Shimberg Center for Housing Studies, Miami-Dade County lost nearly 21,000 affordable apartments—or those that low- or medium-income people can rent without spending more than 40% of their income each month—from 2000 to 2012. In most cases, the buildings were torn down or converted to attract residents with higher incomes.

The city’s first development is actually an 83-story luxury tower, but they stated that it helped finance the creation of the regional center and that they expect many future projects to target affordable housing. In fact after getting wind of the program a veterans group and some members of the business community came out with a plan to build mixed use facility for veterans near the University of Miami hospital.

August 7, 2015 at 2:42 pm Leave a comment

Competing With the ‘Rents or Grand-‘Rents

The general media has noticed a trend that apartment professionals have noticed for a while: Millennials and Boomers coexisting in apartment communities. Bloomberg recently ran a pretty long story about it:

The number of renters who are 65 or older will reach 12.2 million by 2030, more than double the level in 2010, according to research by the Urban Institute in Washington. While the millennial generation born after 1980 has driven demand for apartments in recent years, baby boomers — those born from 1946 to 1964 — will be the next wave, pushing up rents and spurring construction of more multifamily housing.

And the older set becoming renters is a big reason the apartment industry is doing so well:

“It’s a combination of their sheer size and that they’re entering the age range where they increasingly downsize,” Jordan Rappaport, a senior economist at the Federal Reserve Bank of Kansas City, who has also studied the subject, said in a telephone interview. As a result, “it will put upward pressure on rents for all types” of multifamily homes, he said.

Rappaport’s research found that adults in their 50s and 60s accounted for almost all of the net increase in multifamily occupancy from 2000 to 2013. Once members of the baby boom generation start entering their 70s next year and downsize, “multifamily home construction is likely to continue to grow at a healthy rate through the end of the decade,” he wrote in a report published last month.

Some developers are adjusting to address the trend:

Alliance Residential is designing buildings with smaller, more affordable units on ground floors to attract young adults, while creating more spacious apartments on upper levels, said Ian Swiergol, managing director of the developer’s division covering New Mexico, Arizona and Utah. The bigger units feature wine refrigerators and touch-button window screens that appeal to baby boomers with more wealth.

In one extreme example, a 28-year-old man ended up living in the same community as his 90 year-old grandmother, said Swiergol, who is based in Phoenix.

Who knows, maybe we’ll start seeing shuffle boards being built next to the swimming pools and volleyball pits.

July 29, 2015 at 7:04 pm Leave a comment

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