Read this headline. Think about what it’s saying. It puts the words “affordable” (i.e., inexpensive and plentiful) in the same sentence with “lottery” (i.e., scarce).
Remember when 72-inch flat-screen TVs were a $10,000 luxury? Now we can select from scores of competing brands for a small fraction of that cost.
How did this happen? Was it the result of a lottery? Government regulation? Limits on new flat-screen TV production and ownership?
No. It was the result of competition.
Let the marketplace work. Deregulate the production of housing and let developers like me reach renters and buyers previously unreached.
From the piece:
“The affordable housing lottery has launched for 200 Montague Street, a 20-story residential building in Brooklyn Heights, Brooklyn. Designed by Beyer Blinder Belle and developed by Aurora Capital Partners, the structure yields 121 residences. Available on NYC Housing Connect are 38 units for residents at 80 to 130 percent of the area median income (AMI), ranging in eligible income from $54,960 to $215,1500.”
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.”
“It’s critical for investors to understand that affordable housing is a strong and stable investment, one that’s resilient even when the economy isn’t. We have seen gains in the real estate market slowing, yet the affordable housing market remains strong.”
“Building homes off-site can help speed up the time it takes to complete homes in areas of the country that face extreme weather, Lawrence said, as the initial construction process takes place inside and away from the elements. It’s also more efficient in the sense that workers build the homes in an assembly line approach versus starting from scratch at each job site. Economies of scale not only reduce material costs, but they can also reduce waste generated during construction, Lawrence added. “
“Affordable housing has shown itself to be a strong hedge against a recession. While higher-end, higher-rent communities are more likely to be plagued with higher vacancies when residents tighten their belts, affordable housing always remains in demand — if anything, demand is even higher in a downturn.”
Johnston Farms Apartment Homes is a proposed 120-unit apartment community serving families in Rock Hill, South Carolina. The estimated cost of this project is $35 million. This workforce housing development project, which targets families earning 80% of area median income, is proposed to be financed with essential function bonds. Construction is planned for May 2023.
The following video gives an overview of this energy-efficient workforce housing development. Feel free to contact Jeff Carroll at tartanresidential@gmail.com with any questions you may have regarding this or any of Tartan Residential’s other energy-efficient workforce housing development opportunities.
In 2014 Tartan Residential began work on Buchanan’s Crossing Subdivision – A 40-unit duplex development serving families in Kansas City, Kansas. Phase 1 consisted of 16 units and was constructed with traditional wood-framed exterior walls and R-13 batt insulation. Phase 2 consisted of 8 units and was constructed with R-26 polyurethane-filled structural insulated panels. In all other respects, the first two phases were identical.
This side-by-side demonstration underscored the benefits of building with structural insulated panels. Although building with panels cost more than traditional stick-frame construction, we identified a long list of construction, operating and financial benefits associated with panelized construction.
Our design team took what we learned and engineered a 3-story garden apartment building using structural insulated wall panels. Davidson’s Landing, a 115-unit workforce housing development financed with tax-exempt bonds and located in Kansas City, Kansas is currently under construction utilizing this building system. We are currently about 70% complete, ahead of schedule and below budget. Our first units will be ready for occupancy in the next month or two.
A few weeks ago our team obtained a building permit to begin construction on Buchanan’s Crossing Phase 3, a 16-unit workforce housing development to be financed with tax-exempt bonds. Phase 3 will be constructed with R-18 graphite-infused polystyrene exterior wall panels. We plan to use high-efficiency water heaters and HVAC systems for this phase. And we plan to build one building with panels on one side of the duplex and lumber and fiberglass on the other side.
Our design team – which includes the Virginia Center for Housing Research and Mathis Consulting Company (principal Chris Mathis is an MIT-educated building performance specialist and an ASHRAE Fellow) – plans to create simulated living environments in these side-by-side units to observe and collect data on for one year. This one-of-a-kind comparison should highlight additional benefits of energy-efficient construction systems.
The following video gives and overview of this small, but exciting project. Feel free to contact Jeff Carroll at tartanresidential@gmail.com with any questions you may have regarding Tartan’s energy-efficient workforce housing development opportunities.
Received unanimous City Council approval for $18 million of tax exempt bonds for Johnston Farms Apartment Homes, our 120-unit workforce housing development located in Rock Hill, SC.
Our plan is to provide apartment units priced at a discount to market along with job placement services and workforce training incentives to our residents.
I’m really proud of my team for helping me put this deal together.
Here’s a short (4 min) video featuring kudos from City Council members.
Tartan Residential closed on a $25.8 million workforce housing development deal on July 22, 2021 – the first of a new class of apartment investments. We started working on this transaction five years ago. We survived COVID. We survived the loss of a key investor last summer. And we survived a $900,000 lumber price spike earlier this year. Yet we still got the deal done.
From the investment banker who worked with us over the past three years to close this transaction:
“Congratulations Jeff… you are the true definition of tenacity and persistence in my book Sir! What a journey… now go have fun building it!”
I am thrilled to get this deal closed. And I am humbled to have a loyal team of seasoned professionals to work with every day.
