“Housing costs are being driven up by low supply, increased demand, poor wage growth, and a lack of proper financing tools.”
By Kelsi Maree Borland, GlobeSt.com, January 13, 2020
“The affordable housing crisis doesn’t seem to be getting better. At the moment, there is a perfect storm driving housing prices and rents up. The storm includes low supply, increased demand, poor wage growth and a lack of proper financing tools, all of which are helping to drive rents up.
“ ‘Although we have more resources today, high development costs for land and construction are making it harder to build financially viable affordable housing projects’, says Ceclie Chalifour, west division manager for Community Development Banking at Chase.
- ‘It isn’t only a severe supply demand imbalance, but also a shortage of funding tools and solutions to bring more affordable housing product to the market,’ says Chalifour.
- ‘Over the last couple of years across California, we saw major support from voters and elected officials for legislative and regulatory reforms, as well as additional resources to support the production and preservation of affordable housing, in response to the heightened crisis.’
- ‘The complexity of the tools to finance affordable housing can also present challenges. Developers and financial partners spend a tremendous amount of time, capacity, and financial resources to secure funds and structure transactions.’
“On the capital side, financing packages have focused on permanent supportive housing and workforce housing.
- ‘This has led to industry-wide constructive conversations on underwriting operating subsidies and market risk, capacity of new industry players, and the gap in financial tools,’ says Chalifour. ‘We also saw some innovative approaches to construction and finance, such as modular construction, public sale of bonds, 40-year amortization, and early rate locks, among others.’ ”
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