The real estate recovery will continue to move forward in 2013 but slowly. Global economic turmoil will restrain confidence but overpriced core markets will begin to drive interest in strong secondary markets. Most locations can still not support commercial construction because of the weak tenant demand and employment outlook. Multifamily development remains the only strong sector but is expected to be peak in 2014-2015.
Posts from the ‘Affordable Housing’ Category
(1) As the decline changes course it will emerge in demand across gen X, Y and baby boomer generations.
(2) Buyers need what they can afford and what they can finance. Sustainability and energy efficiency is important but buyers are not willing to pay extra – this is the new standard.
(3) Back to the basics before the market become overheated – the basics haven’t changed.
(4) Feasibility of suburban development is questioned in tough economic times but people continue to want yards, good schools and a secure way of life. Urban infill doesn’t work for most production builders. Suburban development is not dead but remote suburbs have lost appeal – closer in locations close to jobs and services will succeed.
(5) Great planning is important in establishing a social infrastructure that will create community.
(6) Inexpensive shifts that positively impact our lives will be the successful breakthroughs. Mini-master planned communities will be 50-100 acres in first and second ring suburbs; they will be 40 year old strip malls and old industrial areas which are close to where things are happening. 20-40 units per acres that still feel relaxed and comfortable; active adult and age-targeted homes will mix into traditional neighborhoods.
(7) Face-to-face conversations and connections are still important. Social media, by itself, is not a tool to sell a community, but rather a way to engage a community and drive lifestyle.
(8) The reality is that millions have damaged credit and potential for financial innovation exists to meet the needs of consumers.
(9) Market uncertainty appears to be transforming the adversarial nature of the builder, developer, and capital relationship to one of collaboration and cooperative alliances, and more creative partnerships are becoming the norm.
(10) New development will not be feasible until distressed lot supply is absorbed.
(11) Successful public/private partnerships will require long developer track records and impeccable credibility.
(12) To secure financing, loans for projects need to be relatively low leverage at 35-40%.
(13) Private equity will be the first to jump back into real estate finance. Banks and institutions will follow reluctantly, but only once a sustained records of growth, in terms of home and land pricing and absorption rates, is established in the market.
(14) We will all be in the business of fixing broken projects for the next few years.
Has anyone seen a dynamic model where density bonuses are allocated based upon underlying land economics, actual feasibility, market conditions or other fluid economic drivers that create demand for housing in a given location? Assuming all real estate is not created equal, we are struggling to understand how a physical regulation supplying blanket density bonuses can address the housing need alone without taking economics into consideration.
Winlsow Pointe was recently awarded $824,415 annual tax credits and $665,000 RPP loan funds. The project will be built within the city limits of Greenville, North Carolina and in January was also awarded $450,000 local HOME funds, better positioning the project to receive this State and Federal funding. Combined, the multiple layers of financing will allow for this project to come to fruition and will provide 84 new high quality apartments for families earning at or below 60% of local median income. Congrats to team NRP!
Leaders in affordable housing gathered from throughout the Carolinas to discuss the importance of affordable housing and how to meet the demand through new and innovative ways. Ideas and issues discussed include the following:
• Is there still an unmet need for affordable housing?
• Does NIMBY-opposition prevent affordable housing from expanding into “good” neighborhoods?
• Do affordable projects drag down host neighborhoods?
• How can the public and private sectors cooperate to stimulate more affordable housing in our region?
• Should mandatory inclusionary housing be a part of our region’s future housing strategy?
• What capital is available to support new or rehabilitated affordable housing?
• How can developers and sponsors make money from new affordable housing projects?
In general, it seemed that publicly supported mechanisms used elsewhere in the country would not be supported by the development community or local governments. Most significantly, tax increment financing and inclusionary housing have provided substantial gains in affordable housing production in other parts of the country. It is estimated that Charlotte has a 25,000 unit deficit in affordable units (in terms of rent burdened population); work still needs to be done to advance the cause and meet this need. This is as critical an infrastructure component in successful communities as are roads, bridges and utilities.