middle class. A solution floating around that is projected to be heavily
supported by the industry is the Middle-Income Housing Tax Credit.
Introduced in the Senate Finance committee in September of 2016, the
credit will offer to states the allocation of tax credits distributed competi-
tively to finance 50% of the costs of qualifying units. This would require that
60% of units were affordable to families earning no more than 100% of the
area’s median income, and would be paid out over 15 years, in alignment
with the restricted rental rate period for the development.
Throwing heavy multifamily support behind this effort can help de-
velopers bridge market gaps without heavily impacting development plans,
and offers another solution for an oft overlooked portion of the population.
It also creates a solution for developers who are concerned with the af-
fordable market. By creating properties that serve a more mixed-income,
demand is met across multiple properties without significantly altering
development resources.
New Urban Neighborhood, New Development Benefits
Another consideration for developers who are debating their ability
to get in on the affordable housing market is a movement to new urban
friendly designs and projects. The majority of multifamily development
on the market remains traditional. However, transitioning to a mixed-use
approach could benefit developers looking for new ways to balance the
cost of building in urban areas without transferring too much rent burden
onto residents.
Mixed-use and ground level retail in multifamily is a long-existing
concept, but has largely been limited to downtown high rise developments.
The addition of this style of development to more mid-rise apartments
opens the possibility for a trend that not only improves the community
for residents, but increases business and interest for developers as well. A
prime example of this is the new development at 2401 Blake. In the
crowded Ballpark neighborhood, the space is designed to create a cohesive
experience between retail and residential . For the area, the space prom-
ises to be revolutionary and could spawn a neighborhood transformation.
Encouraging this kind of development could spur a new movement towards
consistent mixed-use space in similar developments, which would benefit
both communities and developers.
Forward Thinking Affordability
In the modern economy, it’s no longer simple enough to believe that
supply and demand will always dictate market trends. Stagnant wages and
a lack of growth in high-paying jobs has left many once comfortable
families in the difficult situation of living beyond their means, because the
ability to maintain that lifestyle no longer exists.
The movement of this class to a border of affordable need won’t reflect
in the economic demand immediately. Adding this group of people to
the already struggling low-income groups will only further saturate the
market’s need for affordable housing. The solution isn’t necessarily to
drop all development in favor of affordable development. Instead, the
movement to greater mixed-income housing can help alleviate the
struggle of groups on the edge while still maintaining positive sentiment
with developers and investors.
Cyndi Oaxaca is a Content Strategist for Criterion.B, an
agency focused on branding and inbound marketing for the
commercial real estate and multifamily housing industry.
www.aamdhq.org
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