The pandemic has put even more pressure on the country’s already underserved affordable housing sector. According to a recent Moody’s Analytics article, annual supply is less than demand by about 100,000 units nationwide.
Northeastern subways like Philadelphia and Boston were experiencing declining affordability even before the health crisis. High land and construction costs, strict zoning regulations and other factors have all contributed to the lack of affordable housing supply in the area.
To understand how developers are tackling the latest challenges and what the road to recovery looks like, Multi-housing news contacted Standard Communities Northeast Development Director Sean Carpenter. He recently joined the company from non-profit developer AHSC Inc. and has over 20 years of experience in affordable housing development, rights, finance and policy.
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How have multifamily investors in the Northeast react so far to the challenges brought about by the pandemic?
Carpenter: From the start, there was pressure to protect the tenancy, including eviction bans motivated by valid fears that those who lost their jobs could also lose their homes. For example, Standard Communities, with a large portfolio of affordable multi-family housing, has committed to an eviction diversion commitment in cooperation with government agencies and community organizations.
Investors are also increasing their presence in Northeast markets, driven by the economic and social returns from affordable housing. Recognizing the need for affordable housing in the Northeast, over the past six months Standard has completed its first three affordable housing and workforce housing deals in Massachusetts and has also hired me with the mission to identify affordable development opportunities.
Philadelphia has a long recovery ahead of it, with unemployment rates still struggling to catch up with the national average and a decline in the affordable housing stock. How do developers approach this market?
Carpenter: Any major city in the Northeast faces an accessibility crisis, especially those that depend economically on service industries, tourism, and major professional sporting and entertainment events. Take restaurants for example. The pandemic crippled their businesses for over a year, and many have shut down permanently. Now, many restaurant workers have to find new jobs, perhaps with lower wages.
Lower incomes obviously hamper their ability to pay rent, thus increasing the burden of housing costs that was already high throughout the Northeast. This harsh reality is underscored by a recent Harvard JCHS report revealing a loss of four million affordable homes nationwide.
Even with the growing need, investors and developers of affordable housing in the densely populated northeast face the high cost of land, as well as construction costs above the national average, in addition to discouraging zoning regulations. workforce development and affordable housing. . These factors are forcing investors in affordable and workforce housing to seek creative and agile approaches to preserving and creating housing in the North East.
A recent report from ULI suggests that natural affordable housing in Philadelphia could be a road to recovery. Do you agree with this observation?
Carpenter: Natural affordable housing can be a great opportunity to increase the supply of affordable housing while reducing the overall cost burden. For example, over the past six months, Standard Communities has spearheaded public-private partnerships to preserve natural affordable housing and create 650 dedicated workforce housing units in California and the East. .
Government agencies at all levels should seek public-private partnerships and other innovative solutions to provide additional resources to address the affordable housing crisis. With committed public partners, there are ways to provide affordable, high-quality housing to those in need, for the benefit of entire communities.
A similar story of a difficult recovery is playing out in the Boston subway as well. How are investors prepared to meet the challenges of this market?
Carpenter: We don’t need more studies to highlight the need for affordable housing. The affordable housing and workforce crisis is more than a financial problem. It is also a problem of land use.
Towns and villages in the “spot zone” to exclude higher density multi-family dwellings. If zoning boards and planning commissions do not approve affordable or labor-intensive residential developments, the problem cannot be solved.
Fortunately, the Massachusetts legislature attempted to fix the problem, and the governor and legislature were able to enact legislation allowing affordable multi-family housing in transit areas, smart growth initiatives, and increased incentives for municipalities to to allow more developments. This legislation will help during the difficult recovery.
How did the flight to the suburbs influence the Boston housing market?
Carpenter: As the pandemic eases and people return to their offices rather than working remotely, traffic on the Southeast Highway increases dramatically. This increase in traffic reflects a growing movement back to the heart of Boston for many. Boston is a great city to live in, with attractive neighborhoods that make it feel like a small town. People want to live and work here, and Standard Communities is aggressively seeking development opportunities in and around Boston.
In Greater Boston, a significant amount of real estate is made up of underutilized assets, such as vacant office buildings and closed college campuses, among others. Do you think these represent a viable option for investing in affordable housing?
Carpenter: Reallocation of existing structures for the workforce and affordable housing is a successful strategy across the country. Converting some of these assets to viable housing often requires zoning changes, as most are zoned non-residential. Standard and its industry advocate for families looking for affordable housing and workforce housing, and we support the zoning changes needed to create much-needed housing through the adaptive reuse of existing assets.
President Biden announced a $ 2.3 trillion infrastructure proposal, with $ 213 billion set aside to support affordable housing. Do you think this injection of capital will ease the affordable housing crisis in the Northeast over the next few years?
Carpenter: In the densely populated northeast, the high cost of land and construction costs to develop affordable, labor-intensive housing require federal support. Washington has the responsibility – and the capacity – to play a critical and proactive role in spurring the development of affordable, workforce-friendly housing as an important part of America’s infrastructure recovery.
How do you see the region’s affordable housing sector performing this year?
Carpenter: The elements necessary for a vigorous recovery are emerging. As the pandemic subsides, businesses are reopening, people are returning to work, and consumers are shopping and traveling again, and we are starting to see signs of increasing economic vitality. Add to this positive backdrop stable interest rates, development incentives, restrictive zoning reform and, most importantly, a strong and growing demand for labor and affordable housing, and we are optimistic that the Affordable housing in New England will be strong this year and into 2022.