Affordable Housing Options

The Missing Middle is Still Missing: Why I Believe We Need More Than Just Luxury and LIHTC In most cities, we have two dominant housing models: -Luxury apartments with rooftop decks and garage parking, funded by private capital, marketed at the highest rent the market will bear. -Affordable housing financed through Low-Income Housing Tax Credits (LIHTC), often restricted to those earning 30%–60% of Area Median Income. What’s missing is everything in between. What is “Missing Middle Housing”? Missing Middle Housing refers to the types of homes that used to be common but have largely disappeared from new construction: -Duplexes -Fourplexes -Bungalow courts -Walk-up apartments above corner stores -Small multi-family homes in walkable neighborhoods -Creative infill developments These housing types fill a crucial need for working-class people, teachers, firefighters, baristas, social workers, and young families who don’t qualify for LIHTC housing but also can’t afford luxury rent or a down payment on a single-family home. Why It’s Still Missing The reason we don’t see more of this is not because there’s no demand. It’s because our systems actively work against it. Zoning laws that ban multi-family housing in most neighborhoods Parking requirements that inflate costs and reduce feasibility Financing models that favor large-scale over small-scale development Public resistance to change, often rooted in misinformation or exclusion Developers aren’t incentivized to build Missing Middle housing. Cities rarely streamline it. And when we talk about housing policy, this middle tier gets lost in the noise between high-end and deeply affordable. What We Need to Change *We need zoning that allows for gentle density. *We need capital that supports small-scale, context-sensitive development. *We need public conversations that value housing diversity as a community strength. We also need to stop pretending that LIHTC alone can solve our affordability crisis. It’s one tool. A powerful one, yes. But it cannot be the only strategy on the table. It’s Time to Build the Middle When we build only for the top and the bottom, we leave out the majority of our communities. We erode economic mobility. We undermine walkability. We disconnect our neighborhoods from the people who hold them together. If we’re serious about equitable cities, we have to bring back the middle. Not just in price point, but in form, in access, and in who gets to live where.

Everyone says office conversions don't work. This developer just doubled this building's value. Here's what nobody tells you: A record 71,000 office-to-apartment conversions are in the pipeline. Most will fail. Some will soar. Here's how Connecticut-based developer Juan Salas-Romer turned one into gold: The scene: An 1855 building in New Haven. 13,900 square feet of history. And one massive opportunity hiding in plain sight. When their largest tenant left, most would enter crisis mode. But Juan saw conversion. The math is simple: Office space brought in $18 per square foot. Apartments? $43.20. A simple 2.4x revenue play. But the execution is never simple. Nobody tells you about: • The sprinkler system that ate their budget • The plumbing that killed their layout • The HVAC that changed everything • The fire codes that rewrote their plans The result? • 34% over budget • 5 months behind schedule • Countless "surprises” But watch what happened next: Before conversion: NOI sat at $154,380. Building valued at $2.2M. After their magic: • NOI jumped to $267,000 • Value hit $4.45M • $1.075M in equity Here's what Juan and his team learned the hard way: • Window placement (it limits everything) • Plumbing costs (they explode) • HVAC flexibility (it disappears) • Fire code impact (it changes everything) Most conversions fail because nobody checks these basic things. But when it works? • Revenue jumps 44% • NOI soars 73% • Value doubles Before you touch an office building, check: • Natural light feasibility • Plumbing capacity • HVAC flexibility • Structural integrity • Budget contingency (we learned 30%+ is smart) Here's the reality: we're watching office buildings die while housing demand hits record highs. The opportunity is obvious, but the execution? That's where most people fail. The full story is linked in the comments.

Too often we see policymakers put disproportionate focus on slow, tiny wins in affordable housing over embracing real needle movers. Here's one example: New York leaders are celebrating the end of a 44-year journey that delivered low-cost housing for 5 households. Not a typo. Five. Now don't get me wrong. Every bit helps. And I'm happy for these five people who will be able to purchase a multifamily unit in one of America's priciest neighborhoods for just $2,500. Also not a typo. $2,500 to purchase a unit. Or even cheaper -- $250 -- for those who can't afford $2,500. There's another 21 units available for purchase via a lottery among households with incomes at 130% of area median income -- a threshold the state no longer views as "affordable." But this story also highlights the slow-moving bureaucratic absurdity of a 44-year process that involved countless hours of work by city employees at a cost of $1 million per unit (even with free land!) paid with public dollars and charity funds. As the author of this article notes: If not for the city's own red-tape rules, NYC could have sold the property long ago and it could have been re-developed in around 3 years under the state's former 421a program without any public dollars AND resulted in even more affordable housing. More people provided affordable housing much faster. Seems logical, right? Too logical. It's easy to pick on New York City but we all know similar nonsense taking place in cities all over the country -- focusing on slow, tiny wins over faster, bigger wins in housing. Every bit helps, yes, but we need to put more focus on big-ticket items that move the needle faster, more efficiently and at a larger scale. Such as: 1) Create win/win programs (like Live Local in Florida) to incentivize affordable and workforce housing. Instead of demonizing housing developers like the cynics in New York who killed 421a, find ways to work together. 2) Reform zoning laws and remove red tape that drives up the cost of housing and volume of housing production. A newly released report by NMHC and NAHB "found code changes over the past 10 years were the single largest cost driver to multifamily development costs." That's something policymakers at every level can directly address. 3) Expand and reform the federal Low Income Housing Tax Credit program to encourage more affordable housing construction (and pass the Middle Income Housing Tax Credit program, too). One common sense reform is to award LIHTC funding to cities that meet certain targets on zoning and red tape. For example, there's no reason it should cost more to build affordable housing than market-rate housing, yet it does in some cities like Los Angeles due city hall silliness. Let's go big on affordable housing. Slow, tiny wins are fine. But big wins over shorter time periods are much better. #affordablehousing #housing #multifamily https://lnkd.in/gNU-VSHe

In our latest research, we find: - Housing cost burdens reached a new peak in 2023, with 16.9 million homeowners spending more than 30 percent of their income on housing—the highest level in over a decade. - Nearly 60% of the increase in newly burdened homeowners since 2019 came from those spending over half their income on housing—showing that affordability challenges have grown more common and more severe. - Cost-burdened younger and older homeowners have driven most of the increase since 2019, making up 87% of the three million newly affected households—highlighting growing pressure at both ends of the age spectrum. The full analysis and interactive dashboard is linked in the comments!

Billions of Multifamily development projects aren’t getting off the ground: Why? The numbers don’t work. Period. Lenders won’t issue the financing for construction because today’s interest rates don’t allow for a refinance of the exit post-construction. Here is the math for a typical project I've seen: *Multifamily stick on podium (the 5 to 6 story stuff you see everywhere) costs roughly around $400,000 per 2 bed unit to develop (c. $300psf-$450psf) in the Northeast. *Rents typically range from $3000 to $4500 per month *Expenses are 30%-35% of rents *Therefore income is ~$25,000 unit/yr Income typically must cover debt financing costs by 1.2x so ~$20,000 can be used for interest payments = at 7% rates a developer is capped at borrowing about $300,000/unit towards construction, i.e. only 70% of the construction costs! That doesn’t include land. Nor the holding costs. Nor the developer's fees/cost. Nor the interest cost during construction. And certainly not the cost of capital to investors. Furthermore, the land has a value: the development profit has to be greater than the next best alternative use (parking, retail, an existing property… etc…). So how does a municipality make development work? Subsidies? That’s why affordable housing projects can still proceed.  Or higher rents: i.e. $5000+ rents for 2 beds. However, if municipalities are requiring 20% affordable housing it brings average rents back down to the $4,000 range, so again projects don’t pencil. The bigger issue is developers don’t want to start permitting projects they know don’t pencil. So, even if rates and construction costs fall, zoning and affordability requirements will mean developers won’t start the process for future projects as there is too much uncertainty. Post is in response to planning board member Chris Gittins' request to understand the financial considerations of multifamily/mixed-use developments (thank you). And Scott Bailey’s request to make it a post. I welcome any of the multifamily development pros to opine as well. And, none of this is investment advice, just my personal observations on the topic. Demetrios Salpoglou, Chris Fitzpatrick, John Burns, Jay Doherty, Jonathan Berk, Marc Savatsky, CRE Analyst, Keith Hughes, Scott Trench. #MultifamilyDevelopment #ConstructionFinancing #RealEstateInvestment

Homes are not affordable. We all know this. This Wednesday, existing home sales numbers are released, followed by new home sales on Thursday. With a full week of Fed speakers discussing interest rates, one has to wonder: Will any of this lead to more affordable homes? The primary objectives of the Federal Reserve, as defined by Congress, are promoting maximum employment, controlling inflation, and moderating long-term interest rates. Increasing homeownership is not one of their mandates. Clearly, interest rates significantly affect home affordability. But if you look at the graphic below, we are way out of line with the median home price versus median income. If we are looking at higher rates for longer, what can be done to narrow the gap? Here’s a couple of ideas for discussion: → Direct-to-Consumer Home Manufacturing Idea: Utilize modern prefabricated and modular home technologies which allow for the mass production of homes and apartments at lower costs. These technologies reduce costs by minimizing labor and waste during the construction process. Companies could sell these directly to consumers, bypassing some of the traditional capital raising, construction, and real estate brokerage costs. Examples: Look at companies like ICON, which uses 3D printing to build homes quickly and at a fraction of the cost of traditional construction. I think this could also work for direct to consumer apartments with fractional ownership. I know a few people working on that one. → Cooperative Housing Idea: Promote housing cooperatives where residents own shares in a corporation that owns the property, reducing individual financial burdens and fostering community governance of housing. Example: The Co-operative Housing Federation of Canada provides a framework for cooperative housing, where members democratically control the housing they live in, keeping it affordable. The difference between cooperative ownership and straightforward subsidies is very important. In this model, residents collectively own and manage the housing development. This encourages more resident participation and control, which can lead to a stronger sense of community and stability among occupants. Ongoing costs are shared among members, potentially reducing individual expenses. Of course, many co-ops face financial challenges related to aging infrastructure. Continued investment and public funding are crucial to maintaining these properties and ensuring they remain affordable and safe for residents. But can a modern model be created? What other innovative solutions do you think could help bridge the gap between home prices and median income? #fed #housing

Something is very wrong in the housing market. In my LinkedIn feed, I keep seeing two striking themes: -First-time homebuyers desperate to find an affordable place to call home. -Real estate developers and property owners claiming they're “focused on expanding affordable housing options.” It got me thinking. Why are so many motivated, qualified buyers unable to find affordable homes, while developers continue to talk about affordability like it’s a done deal? The pieces don’t fit. So, I reached out to a few friends and industry contacts working in real estate, lending, and housing policy. Here are a few things I can tell you for certain: -Affordable housing projects are often proposed with price tags that are anything but affordable for actual first-time buyers. -Even when subsidies or incentives exist, they’re frequently buried in complex red tape, making it nearly impossible for those who need them most to benefit. -Market pressures and profit motives often mean homes meant to be “affordable” are priced just high enough to exclude the very people they’re intended to serve. These issues don’t stem from lack of demand or a shortage of buyers; they’re rooted in how “affordable housing” is defined, structured, and delivered. Imagine you’re a young professional or family hoping to finally own your first home—only to find that even “affordable” housing is out of reach, or to be told to "just keep renting." (Really, think about that for a moment. Imagine spending your weekends touring places, crunching numbers, and barely making the down payment—only to realize it’s still out of reach.) Creating a pipeline of homes people can genuinely afford requires intentional design, not just slogans about “affordable housing” or “accessible living.” If your company or organization promotes affordable housing without setting prices or policies that truly match community income levels, you’re part of the problem. First-time buyers aren’t just looking for the chance to “get in the market.” They’re trying to build a stable life, and a home is a huge part of that dream. Be better. Do better. Build better. #allofus

You can live in a home built by robot and powered by solar in Fort Myers, Florida. Pretty awesome. not sci-fi—already here (in florida). FBR’s Hadrian X is a construction robot that lays bricks with millimeter precision using a polyurethane adhesive instead of mortar. It’s fast (up to 500 bricks/hour), accurate, and runs continuously, rain or shine. How it works: - 30-meter articulated arm on a truck lays bricks using CAD files - uses a construction adhesive (instead of mortar) that cures faster and reduces mess - continuously monitors for wind, vibration, and movement for placement accuracy within 0.5mm 📉 Why it matters: If america is going to thrive, we need housing to be affordable. Unfortunately, homes are expensive. construction productivity in the U.S. has actually DECLINED since the 1960s. Hadrian X can cut labor costs by up to 70% on the wall phase of builds, and FBR says it can reduce total build time by 30%. 📍 Where this is happening: The homes are going up in Fort Myers, Florida, in a solar-powered, sustainable community called Sustainable Living Innovations. It’s a 100+ home development focused on affordability, resilience, and reducing operational emissions. And this is not the first project, have done bunch in Australia as well (where company is based). Pretty cool!

This startup uses a surprising eco-conscious tool to build homes: 3D printing. Litehaus, a startup founded by a couple, is using technology to redefine how we think about real estate in a more sustainable way. These 3D-printed modular homes are 30% cheaper, 40% faster to build, and generate 60% less environmental impact. That translates to 90% less construction waste and 50% fewer CO₂ emissions compared to traditional building methods. Their platform connects landowners and developers with architects, contractors, and designers, making it easier to track costs, timelines, and progress—all while promoting sustainable building practices. This is what the future of tech can look like: finding creative and innovative ways to solve real-world problems like saving the environment. Read more: https://lnkd.in/e2icwk-M