The bursting of the housing bubble has quite logically reset the ownership to rental equilibrium as the percentage of renters is higher than home buyers. Developers are now focusing on constructing new homes for the high-end market, and the number of starter homes is dwindling fast. Young people who need a home are keen on renting rather than buying explains Maxwell Drever.
With the shifting cultural patterns and demographics, the demand for affordable workforce housing is increasing. Affordable workforce housing includes more utilitarian residences but cost less and are ideal for people who work in the neighborhood even though these might be pricy properties, These subsidized housings are often part of workforce housing. The level of subsidy available for workforce housing can vary a lot.
The challenges highlighted by Maxwell Drever
Rising construction costs are one of the biggest challenges developers face that have gone up sharply due to the increase in demand for multifamily homes besides the usual factors like the higher cost of land, labor, and materials. Most of the unpredictable cost rise happens due to water issues at the site, the topography of the site, and the supporting infrastructure like water, electricity, and sewer. Low-priced land might not cost low because of the upgrade necessary to bring it at par with the standard topography and even make it accessible to public transit.
Community resistance is another problem as the local sentiment favors market-rate housing over affordable housing that they consider disruptive. The community concern for decreasing property value in the neighborhood due to the introduction of low cost housing is a significant hindrance for developers.
Cost solutions
Recognizing that subsidy programs available for workforce housing are less than traditional low income housing, developers must be creative in garnering funds from other areas comprising multiple loans and investments, feels Maxwell Drever. Besides LIHTC or the low income housing tax credit, the most common source of funding, other funding, and support mechanisms are available according to the location and project. The incentives offered to private developers in the form of tax credits allow them to create market-rate designs and buildings with excellent finishes that are more appealing than the typical utilitarian structures of public housing.
Saving money should be the goal of developers investing in workforce housing. It starts right from the time of site selection with some foresight that helps avoid additional expenses later for upgrading the site. Since most of the unforeseen expenses happen before the construction of the foundation, being careful about the land quality and ensuring that it meets the project objectives without additional investments can keep the costs low.
Tackling the community hurdle
Staying alert and sensitive to the community’s issues and concerns and thinking proactively to counter these should help to do the groundwork in advance to blunt the rumor mills. Implementing programs to reach out to people to highlight the positives of the project before the negative campaign sets in should give them food for thought to counter negative perceptions.
Sharing information about some existing or ongoing projects should help dispel misinformation and misconceptions about the project that can help gain the community’s confidence.
