This year, the multifamily industry will face a number of policy challenges related to affordable housing. Supply shortages and unremitting demand are squeezing sponsors, public agencies, and residents alike. A lack of 7 million housing units intended for low-income renters exists coast-to-coast, according to the National Low Income Housing Coalition. In every state, more than half the population making 30 percent of their area median income have severe financial hardship.
In order to build as many affordable units as possible quickly and economically, a number of regulatory and economic hurdles must be overcome. Multiple ongoing struggles have exacerbated that scarcity, such as rising construction and labor costs, higher rents, and difficult financing.
Recent proposals, legislation, and regulations on affordable housing at all levels of government indicate an increased awareness of the problem, even if the potential for addressing it remains uneven.
By increasing credit allocation by 9 percent, the bill offers potential for easing development costs, particularly for non-profit partners, said Khayree Ducket of Dominium Government Relations. The loss of that allocation last year has made it even more crucial for their pro bono partners due to a decrease in their resources.
Through the Section 8 Housing Choice Voucher Program, the Choice in Affordable Housing Act could incentivize private sector participation in affordable housing development.
Housing Supply Action Plan under the Biden Administration aims to ramp up affordable housing production. Reforming LIHTC qualifications, increasing the amount of money available from Fannie Mae and Freddie Mac, and supporting more economic transit-oriented development are some of the key provisions.
When Congress and the White House say the right things but don’t act immediately, state and local governments often respond more quickly. The two examples Prahl provided were California’s unique private activity bond allocation, which the state has redirected toward supporting the development of multifamily housing, and Minnesota’s 55 percent cap on LITHC financing to prevent over-subsidization. In those states, Prahl says, affordable housing development is being supported by pooling the most resources.