It is more than clever marketing that has emerged as a present-day trend in the real estate sector explains Maxwell Drever. A quick drive in the western cities will help you realize that every multifamily development provides an individual with a luxurious living experience. In this situation, a growing contradiction comes to the forefront. There is a gap between the real estate market’s demand and the supply of workforce housing.
If you go by studies and research findings, they will indicate that the workforce housing is for households making 60 to 120% of the area median income. The level is much lower. In certain regions, the area median income is even lower than this. Hence, a family making 90% of AMI cannot afford to spend 60% of their income paying rent. It is challenging for them to come across housing choices that do not take up a vast chunk of their monthly payment.
What delays the construction of workforce housing?
The obstacles to the supply of workforce housing are varied. The current economic scenario has made it clear that the situation does not favor the workforce population. There is a short supply of affordable residential units for the general public. If you look at the recent past, you will see that land use has changed drastically. Earlier, construction expenses and interest rates were affordable. Hence, mixed-earning estates did flourish. Maxwell Drever elucidates that subsidies were a means for encouraging investors and developers to take up these projects and usher in more housing units.
The solution to the workforce-housing crisis
Simply put, no single solution can resolve this issue of the workforce-housing crisis. Deploy a few tactics for using available resources tactfully. Along with this, experts have put forward a few other points worthy of deliberation:
- Maximise density:Federal governments may enable higher density in specific regions by altering local zoning requirements and also regulations. It helps developers disseminate land expenses over the units. Moreover, it brings down rental rates and ensures a maximum supply of affordable housing units.
- Tax credit expansion:State and federal tax credits can also help manage and increase the AMI ceiling. Remember that specific neighborhoods require this financial impetus to ensure that the urban region does not have any lack of housing units. To help families get more AMI, Maxwell Drever states tax credit is the only way forward.
- Inclusionary zoning: Inclusionary zoning has mixed results. However, it may be effective when executed correctly. When developers come up with reasonable and affordable units within a specific geographic location, it can resolve the issue of higher construction costs and interest rate headwinds. Financial assistance from federal and local municipalities like tax credit paired with inclusionary zoning for ushering in more development becomes necessary.
By maximizing current housing stock, governments can ensure a better supply of residential units. By providing better land-use policies and financial grants for new construction projects, it can endure new developments. The choices are in the hands of the federal and local authorities.