August 28, 2019
by Amy Wolff Sorter
The good news for Texas is that the economic climate is strong. The not-so-good news? Housing affordability is as much a challenge in the Lone Star State as it is in other parts of the country, lower cost of living notwithstanding. It is this challenge that brought together the six-person panel on affordability at the recent Connect Texas Multifamily conference. The session, entitled “Affordable Housing: Short Supply + Growing Demand = Opportunity” saw moderator Hugh Cobb, with Alpha Barnes Real Estate Services, asking questions of the public and private housing panelists.
The first question? The aging demographic, and its impact on affordability. Gary Newbold with Amtex Multi-Housing indicated that affordability issues are about the same for senior housing as it is for standard multifamily. He acknowledged, however, that many of the seniors requiring low-income housing have been unable to physically or economically support their household. “They haven’t been able to set enough aside,” he said. “Or they’ve lost a partner or loved one.”
Moving on to other topics, DMA Companies’ Janine Sisak pointed that low interest rates and tax credit pricing, along with public-private partnerships are helping to gentrify various urban core areas. The challenge, she said, is land. “It’s difficult to find land at a reasonable cost.” Tim Lott with the Dallas Housing Authority agreed, adding that infrastructure is also a huge issue. “Because of aging infrastructure surrounding a property, the city will look at us and say ‘we need you to go back two blocks with sanitary sewer or water lines,’” he said. “Infrastructure will bust your budget in a hurry.”
Then there is neighborhood opposition. Also known as NIMBYism — “not in my backyard.” Debra Guerrero with The NRP Group issued a surprising statement, namely, that the NIMBYs aren’t as vocal as they once were. “We’re seeing the pendulum swinging, as everyone understands there is a need for more affordable housing; there is a real concerted effort to deal with that.” She went on to acknowledge that the acceptance or understanding isn’t everywhere, however. “It takes working with these groups early on, and identifying those areas,” Guerrero advised.
Another interesting topic focused on amenities. The panelists agreed that technology is an important amenity among affordable housing, with “Wi-Fi in common areas important,” said LDG Development’s Theresa Ebner. Sisak said that automated package lockers are in demand and, while she likes to see fitness centers on-site, “smaller footprints of physical amenities aren’t necessary; if you’re near an enriched downtown location, the city is your amenity,” she said.
Or sometimes those amenities are services. “It could be a referral, more skills for better jobs, a GED training class or emergency services,” Guerrero noted. “In many cases, these are working families; many times, single-parent families. They need services that impact quality of life, to benefit their lives.”
An affordable housing panel wouldn’t be informative without a discussion about financing, and the panelists had plenty of opinions on this topic. Lott, with the Dallas Housing Authority, explained that, under Texas law, the DHA and similar organizations throughout the state can create Public Facilities Corporations, which “own the dirt, then ground lease it back to the developer.” Furthermore, “we don’t have to pay sales on goods or services on developments,” he said. The panelists also discussed urban efforts to support the need for affordable housing; “Austin is at the forefront, creating $250 million of bonds to help with that,” Lott said.
The session concluded with moderator Cobb asking about demand. Amtex’s Newbold indicated that absorption among his organization’s properties is between five and 17 units per week, with one of the more interesting trends being areas of transition. “In one situation, a partnership passed on a deal; we got it, and that’s where we’ve seen the highest demand for that product type,” he said. “The tenant base there required a new, healthy place to live.”
Ebner indicated LDG Development underwent the same situation in Fort Worth. “We built a deal in a neighborhood that not everyone loved; it filled up,” she said. “We have two deals in Houston; we tore down the existing facilities, put up new ones, they’re popular. It’s amazing to see the neighborhood rallying to support it.”
Pictured (L-R): Hugh Cobb (Alpha Barnes Real Estate Services); Tim Lott (Dallas Housing Authority); Janine Sisak (DMA Companies); Theresa Ebner (LDG Development); Gary Newbold (Amtex Multi-Housing); Debra Guerrero (The NRP Group)
For comments, questions or concerns, please contact Amy Sorter
Tags: Apartments & Multifamily