NCSHA Washington Report | July 12, 2024
Housing analysts tend to cite sweeping themes and broad trends to make their arguments. People who do housing for a living typically talk in more concrete terms. Here’s what some of the smartest people who own and operate affordable apartments have been saying lately.
“Excessive rent loss will decimate Seattle’s community of nonprofit housing providers,” according to longtime developer and owner Sharon Lee. “We will not have the financial resources to maintain the housing, make mortgage payments, or meet the obligations of our lenders.”
“This is the first time that I have ever seen such high percentages of nonpayment of rent,” says Denise Muha, head of the National Leased Housing Association, which represents hundreds of for-profit and nonprofit owners nationwide, and who has been in the business for decades.
“Our properties are aging, and the effects of the pandemic years — including more time spent at home, struggling tenants, and eviction moratoriums — have taken a toll,” wrote National Housing Trust CEO Priya Jayachandran in May. “The greatest threat to affordable housing is not the lack of resources to build, but the lack of resources to operate, maintain, and repair.”
“Among nine of our nonprofit members, past due rent now exceeds $57M (336% increase since 2018),” Stewards of Affordable Housing for the Future CEO Andrea Posner has reported. Partly as a result, the share of members’ properties operating at a deficit is up 79 percent and “those numbers do not tell the full story of the cost of rent concessions, advances to the properties and reserves used to address property needs.”
“For our [Housing Credit] asset management portfolio, which includes more than 1,300 developments across 44 states, total operating expenditures rose 21% over four years, while insurance costs rose more than two-and-a-half times faster over the same period,” Enterprise CEO and President Shaun Donovan said, also in May.
Optimists hope some of the main causes of this “perfect storm” — higher interest rates, spiking insurance premiums — may moderate in the near future, but few expect them to get meaningfully better any time soon. And one-time federal and state funds for emergency relief, which have injected billions into the low-income apartment system in the last several years, are almost all gone and won’t be replenished in anything near that amount.
Expecting owners to operate at a loss apartments meant to be decent and affordable for low-income people is untenable — they won’t be decent for long. Expecting their renters to pay more for their housing than they reasonably can manage is illogical — it won’t be affordable for many.
So the stresses these and other leaders are giving voice to may well get worse in the coming months and years. This is not your grandmother’s “preservation challenge” (which is still around, too). It’s a new dynamic that will test the resiliency and creativity of affordable apartment operators and all their partners, including state HFAs, like nothing we’ve seen.
领英推荐
Stockton Williams | Executive Director
Washington Report will return July 26.
In This Issue
Upcoming Event
Stockton, These trends are frightening. Hopefully, there are potential remedies. Please share any thoughts and/or let me know if I can help.