We were thrilled to be back—live and in-person—for Ballard Spahr’s 18th annual National Housing Conference last month. Not surprisingly, overcoming challenges in development and preservation of multifamily housing emerged as a major theme, as did bridging gaps in available financing.
Against the backdrop of increasingly challenging macroeconomic conditions, housing leaders from industry and government joined us in Washington, D.C., to discuss innovative approaches and ideas for boosting the housing stock nationwide, with emphasis on affordable, workforce, and specialized housing. As many speakers noted, preserving and creating safe and decent living spaces that people can afford has become a “kitchen table issue” and “front-page news” as the nation struggles with a critical shortage. The range of topics covered at the conference reflected the diversity of disciplines involved in realizing and sustaining a housing sector that works for all—with far-reaching ramifications for the American economy.
One undeniable takeaway from the gathering is that conditions are likely to get more challenging before they get better. Factors such as a looming “tsunami” from existing debt coming due and interest rate caps expiring point to further contraction in the industry due to continuing cost increases, additional tightening of available capital, and related factors.
Still, the creativity and commitment of professionals across the industry lent the conference an air of optimism.
Five Takeaways:
Across the remarkable range of topics and expertise imparted over the two days, some common themes emerged for industry participants to note.
Focus on execution. Across the range of professionals represented, everyone agreed that money will be tight for a while. Therefore, now is the time to be proactive and thoughtful in managing existing projects, obligations, and operations—for both private and public sector organizations. While prior to 2022 the focus may have been on innovating for growth, the focus today should be on innovation and creativity for efficiency and cost savings—stretching the dollars to build or renovate as many units as possible.
Work collaboratively to find solutions. Deals can still get done if all interests can align on getting to the finish line. With the current coalescence of negative pressures, flexibility will be critical to making things work. Litigation should be the very last resort.
Develop affordable housing near workplaces and transit. With many workers nationwide unable to afford to live in the communities where they work, there’s a critical need for affordable and workforce housing near workplaces and mass transit. In addition to being better for workers, such siting reduces traffic congestion and pollution.
One notably successful example is the Amazon Housing Equity Fund. Amazon has dedicated more than $2 billion in below-market capital, in the form of loans and grants, to preserve and create more than 20,000 affordable homes. Amazon has already publicly committed $1.6 billion targeting “hometown” communities that host company facilities.
Leverage public-private collaboration. Much of recent public housing policy focuses on finding ways to increase opportunities for the public and private sectors to work together to address the need. A variety of programs and incentives at the federal, state, and local levels are designed to facilitate publicly desirable development and redevelopment as a partnership among public and private entities.
Prepare for opportunity, it’s on the horizon. Affordable housing industry participants face an array of challenges, including major insurance and other cost increases. But many also see opportunity in the near future—as market challenges facilitate a pricing reset that will eventually benefit those who have managed capital well.
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