The Perfect Storm

Rising construction & operating costs – along with rising interest rates – were partially offset by significant rent increases for market rate properties in 2022. Many of these deals were salvaged by increased market rents last year.

Not so for affordable multifamily.

Costs and interest rates rose for affordable multifamily, too. But rents – which are tied to household income – increased only modestly in 2022. Because of this, many of these restricted rent deals don’t pencil out.

From the piece:

“The 2023 housing market’s ‘headwinds’ are the same for all homebuilders — high construction costs compounded with high interest rates that have lowered borrowing amounts. But those challenges are especially sharp for affordable housing developers.”

A link to the news piece is found here.

Flexible zoning and streamlined procedures can make housing more affordable

“This article is the second in a series examining how innovations in design and construction can bring down the cost of building apartments. The first article discussed how costs vary across different multifamily typologies. In this piece, we address potential cost savings in two categories: land costs and soft costs.”

https://www.brookings.edu/research/flexible-zoning-and-streamlined-procedures-can-make-housing-more-affordable/