Housing Projections from the 2019 MFE Conference
Last week, I attended the Multifamily Executive Conference with Veronica Hinkley Reck, SERA’s new Director of Housing in California. We heard from many of the multi-family housing industry’s leaders – from bankers, fund managers, property developers and operators, and architects. There was both good and concerning news, but the bottom line is that housing is a busy and vibrant sector, and those of us who work in this area will have a lot of opportunities to explore in coming years.
I found that many of this year’s most compelling presentations were those on the state of the economy and where we’re headed. For example, we heard stories that we could confirm in Portland and Oakland—that across the nation, the shortage of housing is an ever-growing concern, and the gap between supply and demand is increasing.
Because the demand for new housing continues to grow everywhere, many industry leaders believe that the housing market will stay strong even if a recession comes (as many believe it will) in the next one-to-four years.
However, it was also noted that because of the challenges private developers face in creating new projects in today’s economic environment (real-estate pricing, scarcity of construction labor, agency process, financing, etc.), most feel they need to create “value adds” to their projects to improve the viability of their proformas. This practice has resulted in a disproportionate number of new developments being market-rate or luxury-type housing, decreasing the supply of new workforce and affordable housing.
Of course, workforce and affordable housing are the most underserved sector for housing in urban centers, and without incentives to bridge costs, the expectation is that the gap will continue to worsen. The shortage is so severe that it’s garnering the attention of state and federal legislators, many of whom are attempting to solve the housing crisis through policy.
While the projections are mixed, our expectations are that work will continue, and as long as that’s true, there’ll be a chance to solve these challenges.
For SERA’s part, we continue to work with developers to find opportunities to make affordable housing pencil out – without sacrificing quality or design. I’m grateful to have attended this year’s conference, and I’m excited to share what I learned with my colleagues!