Affordable housing is in a conundrum

by Richard Brown on November 12, 2008

in Ending Homelessness, Supportive Housing

Need rises as resources dry up

is said to do better than other real estate sectors in a bad economy because government subsidies are available, land and construction costs fall and demand for the apartments rises. NY Times

Affordable housing has been impacted  by the economic meltdown. This conundrum is well known to those involved in developing unaffordable housing in NJ. Two new articles in the NY Times and Affordable Housing Finance highlight the crisis.

The NY Times article highlights the problem: “because of the toll that the credit squeeze has taken on financial institutions, busy developers like Mr. Rose may be more the exception than the rule. Though the need for is likely to grow as unemployment worsens, specialists in mixed-income rental housing say that many developers - especially outside of New York, Los Angeles, San Francisco and Chicago - are finding it difficult or even impossible to put their deals together.” To read the full NY Times article click here.

According to Finance: Another question centers on what effect the recently passed Housing and Economic Recovery Act will have on the industry. The legislation makes several significant changes that are expected to benefit the industry, including fixing the credit rate at 9 percent.

Several investors expect the turbulence to continue in 2009. The market is in a volatile state, given the broader capital market situation, according to Patrick Nash, managing director of JPMorgan Capital Corp. “Even if there is investor interest, prices are at a point that it creates a capital gap in the developer’s budget, and some housing that would get done in a different environment is not going to get done,” he says.

Two years ago, prices averaged about $0.94 or $0.95 per dollar of credit. Today, the average is closer to $0.85. On the flip side, investor yields have increased from 5 percent to more than 7 percent.

To read the full article in Finance click here.

As the government continues to bailout almost every one of the Fortune 500 companies, is it not time to address the crisis?

Share with your social network!
[Facebook] [Friendsite] [Google] [LinkedIn] [Newsvine] [Technorati] [Twitter] [Email] More »
Powered by Bookmarkify™

{ 0 comments }