Long-Term Strategies for Affordable Housing

Row of affordable housing units

Developers are seeking new financing methods to rehab and build affordable housing across the U.S. Combinations of public and private financing include traditional federal and state programs paired with venture capital, REITs and also private corporations that want to support and preserve affordable workforce housing in their markets.

Affordable housing is comparably recession resistant. This makes it attractive to private and institutional investors for portfolio diversification. There are a few reasons for this, including rents tied to area median incomes, high demand, supply scarcity and lower tenant turnover.

Developers are looking for more creative design and building methods that also satisfy financing and low income housing tax credit requirements. They are exploring different housing styles, amenities customized for the local community, sustainable materials and tenant diversity.

Here are some of the trends influencing long-term strategies for affordable housing.

Modular and Prefabricated Housing

With their relatively quick construction process and flexibility for various configurations of housing, modular or prefabricated housing units are cost-effective and customizable by site or community. Units are built in the factory, then transported and reassembled on site.

Some of the risks of these home types are ensuring proper foundation and utility work, quality control, longevity and resale potential. There can be a market bias against modular or prefab construction, however materials and construction methods are improving to incorporate it into modern and attractive affordable housing.

Intergenerational Communities

Promoting socialization, shared resources and security, intergenerational housing is taking root in future development plans. One example is student housing combined with affordable senior housing in the same community.

These communities can be cost-effective by appealing to a variety of tenant needs while also offering co-living and community spaces to reduce per-unit cost. Co-living spaces may include community kitchen facilities or garden and recreation spaces.

Alternative Ownership Models

To ensure affordable housing over the long-term, developers may adopt alternative ownership models such as cooperative housing and/or community land trusts. The right ownership model depends on the land type and neighborhood needs, but these alternatives have been shown to increase equity for poorer residents and sustain affordability in expensive metropolitan areas.

With cooperative housing, residents don’t own their units but purchase shares in the cooperative and pay membership fees. They may require special financing to buy into the cooperative, and they have restrictions on modifying their unit or selling their shares. With a community land trust, the land is owned separately from the homes and preserved for future affordable development. A land trust may have cooperative housing as part of its development.

Sustainable and Innovative Materials

Developers are also exploring building materials that reduce the cost of construction while increasing longevity. This includes 3D-printed or biodegradable materials, alternative energy sources, water-saving devices and green roofs.

Some materials may be cheaper to source and design than traditional materials, thereby lowering the costs of construction per unit. Other materials increase the longevity of structural elements, which will preserve affordable rents and/or maintenance fees in the future.

As developers and community partners focus on long-term strategies for affordable housing, financing is only one solution. Include your LvHJ team in planning discussions that reinvest in your business and streamline your accounting and preserve cash flow. We are your professionals for good.


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