Erica Velez considers herself lucky. The 31-year-old single mother in San Antonio has been struggling to find a place to live since last June when she fell behind on her rent, sleeping on her friend’s couch or in her car. I spent months sleeping in
Then, in November, she received a call that brought her to tears. A two-bedroom home in Mirasol Townhomes, a public housing development of townhouses and single-family homes, has opened for just $675 a month. The previous $950 a month rent was squeezing her salary as a house cleaning service contingent. But now she can afford her own home for herself and her 8-year-old daughter, and her new bedroom is decorated with pictures of her favorite cartoon characters.
“Many people in San Antonio are having trouble finding housing,” Velez said. “It’s out of their price range.”
Her experience reflects the widespread challenges posed by the affordable housing shortage in the United States. Since the pandemic, builders have been hit hard by rising material and labor costs, tighter lending practices, rising interest rates and supply chain disruptions.
Uncertainty threatens to further delay the process of building affordable housing. With so many developments sidetracked or delayed, some experts expect a “production cliff” in a year or so, with fewer new homes hitting the market.
“Thirty years ago when I started my career, the topic of affordable housing was usually confined to really low-income customers, industries and jobs,” said urban development firm Relate Group’s Affordability. said Albert Milo, president of the housing division of . “It’s totally different now. In most parts of the country, we’re talking about teachers, police officers, nurses and professionals struggling to find affordable housing.”
In 2021, 160,000 affordable homes and apartments will be produced nationwide, according to Benson Roberts, president and CEO of the National Association of Affordable Home Financiers.
But industry setbacks have made the country less likely to fill the affordable housing gap.the gap widened Half a million homes during the pandemicAccording to the National Low-Income Housing Coalition, there is a nationwide shortage of 7.3 million rental housing units for ultra-low-income residents.
“At a time when the pandemic moratorium on evictions was expiring and resources were drying up, low-income renters entered a truly brutal housing market,” said Diane, chairman and CEO of the Housing Federation. Mr Yentel said. “Rents are skyrocketing, rising inflation is driving costs across the board, and there is little or no financial resources to pay them.”
Material and labor costs remain high. Developers have responded with cuts such as eliminating amenities, using cheaper materials, setting higher income limits, and reducing the number of affordable apartments in projects that combine affordable housing with market-priced housing. doing.
In their search for affordable housing, builders and financiers combine a variety of public and private funds. But putting together a “capital stack,” a complete financing package that includes loans, tax credits, subsidies, and more, is becoming more difficult.
Lenders have been cautious about investing after several midsize banks failed this year. Interest rates are rising rapidly, increasing costs. Jonathan Gartman, senior vice president of low-cost housing developer NRP Group, said every quarter-point rise in financing costs could add $1 million to development costs.
The low-income housing tax credit program, a key federal tool to fund these builders, has seen its value rise due to rising interest rates and a decline in the volume of multifamily loans by the Department of Housing and Urban Development. have lost part of the halved this year. Even the operating costs of existing buildings are rising, reducing revenues for the companies that operate them and discouraging investment in new projects.
“This is the most difficult time I’ve been in business in 30 years,” said Rafael E. Setero, chief executive of Community Preservation Corporation, a nonprofit affordable housing lender in New York. And it’s a pretty dark situation,” he said.
The vast majority of affordable housing being built comes from private developers who partner with public agencies and take advantage of public subsidies.
Late last year, NRP Group was trying to save a construction contract for Los Arcos at Vida, an affordable project in San Antonio. Construction costs initially stood at $110,000 per unit as of April 2021, but by December interest rates had skyrocketed and the cost per unit jumped to $151,000. The NRP was stymied by a $7.75 million shortfall as much of the public funding was contingent on a deal being completed that year.
“Our motto here is that time kills deals,” said Debra Guerrero, NRP’s senior vice president of strategic partnerships and government affairs. Luckily, the NRP was able to close the gap with municipal bonds and federal funds and break ground.
Developers must navigate the same urban zoning regulations and permitting processes that regulate all construction projects. Brookings Institution researcher and housing expert Jenny Schwetz said the industry needed reforms to zoning regulations and more federal funding. The policy is simple, but the politics to make it happen is difficult, she added.
Local governments, including Montana and Massachusetts, are increasingly changing their zoning and permitting practices to accelerate construction. Some companies are investing heavily in “soft money,” long-term loans with unusually low interest rates.
San Antonio, the poorest major city in the countryIt has enacted policies to help low-income renters, including a $150 million bond issuance to help build affordable housing and a Strategic Housing Implementation Plan, according to census data. Before the pandemic, San Antonio had about 35,000 families on the waiting list for public housing with an average annual income of 11,000, according to Ed Hinojosa Jr., president and chief executive of Opportunity Homes, the city’s housing corporation. It was dollars. Today it is 95,000.
“The need has never been higher than it is now,” Hinojosa said. “And with the trends we’re seeing, this trend will continue to grow.”
The California Department of Housing I created an accelerator program To make up for some of the funding shortfalls amid the pandemic, Congress Passed over 100 laws since 2016 To relax restrictive zoning. Los Angeles Mayor Karen Bass has vowed to end red tape on affordable housing projects.
Florida, which has seen a huge influx of residents, passed a $710 million live local law in March. It is a hybrid package that combines funding and zoning efforts to promote affordable housing construction and usurp some of the local power to block development.
Ryan Von Weller of Wendover Housing Partners, who advised legislators to create Live Local, said the need for such housing was critical, especially in a market with a large hourly hospitality workforce. said.
“We can never wrap our heads around this issue, but something has to be done,” he said. “There is no option to keep watching things go downhill.”
Developers expect the market to eventually normalize, making it easier to raise capital, and some say a cooling in other real estate sectors, such as offices, could free up construction workers. But few hold out hope that production will increase in a way that the supply gap will narrow significantly any time soon.
Perhaps the best case for optimism comes from recognizing the depth of the problem. The sheer scale of the need has led Republican and Democratic politicians to share a sense of urgency, said Yentel, president of the National Low-Income Housing Coalition. Two bipartisan bills to build or maintain 1.5 million affordable homes over the next decade have entered the House of Representatives.
