As the multifamily housing market moves into the new year, developers like Taylor Equities, Mill Creek Residential and Lincoln Property Company, as well as investors and brokers, are riding the tail end of 2019’s trends while keeping an eye out for what the future market will bring. While luxury apartments remain the center of attention, others look towards the dearth of affordable housing and see opportunity. What did the end of the year look like for affordable housing and what could that mean for the next?
A Strong Market For Whom?
If you look at the “big picture” numbers, the real estate market—including multifamily housing—looks to be on an upturn. Homeownership and occupancy rates in the US are peaking and the demand doesn’t seem ready to wane anytime soon. However, when you look at the lower end of the market, you see something different. Rent is increasing across the board, but for low-income families, the paychecks aren’t increasing to match, and development is fixated on luxury properties, with few newer low- or middle-income buildings going up. Because older buildings are also getting demolished or renovated, the supply of affordable housing is shrinking.
Changing Have-Nots to Haves
To answer the affordable housing problem requires multiple approaches, both from legislation and from developers and investors themselves. Rising land development costs are cited as driving the focus on high-income units, and this appears especially true for Steven Taylor and other owners on the west coast. However, programs like the Low-Income Housing Text Credit aim to reduce the costs of development for affordable apartments. Some investors, in turn, see these subsidies as a sign that affordable housing may reverse its decline in the coming year.
The market is not quick to change direction, and affordable housing will likely continue to wane in the next few months. However, many parties looking forward have their sights set on a renewal of low- and middle-income housing, and upcoming elections may offer the spark needed to shift the real estate market.