The demand for affordable housing in South Florida was already strong prior to the onset of the pandemic. Factors such as the current seller’s market, record-low housing inventory numbers, supply chain disruptions impacting construction prices, and the year-over-year rise in home prices alongside continued in-migration and a recovering state and national economy reinforce the need for affordable housing options in a post-COVID world.
The situation may look dire but South Florida’s development and design community is keen on maintaining affordability for buyers and renters via different avenues. From design-led innovations that prioritize affordable building methods to maximizing state and national development incentives and tax credits, the solution to affordability housing in South Florida, and the state for that matter, will require a multifaceted and multidisciplinary approach.
Extracting the benefits of the local zoning ordinances is key in finding the suitable balance between market rate and affordable housing components for new developments, Flux Architects Partner Allen Vandersluis told Invest. Flux Architects’ service model is to review with developers and zoning authorities all possible affordable housing incentives, which can include an increase in the number of units and floor area, additional floors and even reduced parking, Vandersluis said.
“This creates a great opportunity for our clients to capitalize on these incentives. It increases surrounding property value, adds increased wealth into the community and assists municipalities with the need and demand for affordable housing. Ultimately, these projects provide people and communities the opportunity to have affordable living, services, lifestyle amenities, a diversified financial and safer community to live in. Developers also like to focus on cities with underdeveloped properties. This ‘infill model’ reduces development impact on the environment, provides a more localized service demand for utilities, police, fire department and personal services and helps limit development on land vital to our natural resources and biological habitats,” he said.
When working with clients such as Housing Trust Group (HTG), Verdot Capital and Miami-Dade’s Public Housing and Community Development agency, these entities already have affordability and the creation of dynamic public and commercial spaces in mind. “This benefits the project’s occupants and their lifestyle and helps us design and build better communities,” Vandersluis said. Currently, Flux Architects and HTG are working on the programming and concept design phase of a five-story, 80-unit,
affordable housing apartment project for HTG in Bradenton, Florida. “HTG’s business model for that project requires Florida Housing Finance Corporation (FHFC) funding and Low-Income Housing Tax Credits (LIHTC) to make their projects feasible and requires low income, affordable or workforce housing components to qualify for these tax credits and financing,” he said.
Alleviating the Affordability Squeeze
Pandemic-related job losses coupled with South Florida’s penchant for attracting residents and businesses are among the factors exacerbating demand for affordable housing. “Demand for affordable housing in South Florida was already strong but it went through the roof during the pandemic. A lot of people, such as service workers, cruise line and hotel employees lost their jobs, so there was this huge surge in the number of people who income-qualify for affordable housing for the first time ever,” Housing Trust Group President and CEO Matthew A. Rieger told Invest. “We still have long waiting lists at our South Florida affordable communities. And while the economy is beginning to recover, more people are moving into Florida every day so the pressure is still on. Demand far exceeds affordable housing supply.”
Housing Trust Group is a full-service developer of multifamily residential communities across Florida, the Sunbelt and Arizona. The group has a bevy of new, affordable communities opening in South Florida later this year. “In Miami-Dade County, we’re wrapping up construction on Max’s Landing, which will deliver 76 affordable apartments in Kendall, and Father Marquess-Barry Apart
96-unit mixed-income community in the heart of Downtown Hollywood. Village View, a 100-unit affordable community for seniors in Fort Lauderdale, is opening this summer. In fall, HTG will complete Heron Estates Family, delivering 79 new, affordable townhomes to the Palm Beach County community of Riviera Beach. Flagler Station, a 94-unit affordable community in Downtown West Palm Beach, is under construction and scheduled to open in early 2022.”
Maximizing incentives and tax credits is instrumental to the successful development of HTG’s projects and may help bridge the nationwide inventory gap. “The Low Income Housing Tax Credit (LIHTC) is critical. Without tax credit financing, we couldn’t make the math work and we’d have to charge market rate rents to cover the cost of land, construction and operations of a multifamily property. There is widespread bipartisan support for the expansion of the tax credit program, which is in our opinion the best way to close the gap between affordable housing supply and demand in the United States,” Rieger said.
Similarly, the Neighborhood Housing Services of South Florida (NHSSF) is working toward alleviating the affordability challenges in the market. “Even before the pandemic started, South Florida suffered from a lack of affordable and workforce housing inventory that could be accessed by low- and moderate-income buyers,“ CEO Kimberly Henderson told Invest:. “In addition to historic record-low interests, rapidly rising buyer demand from other states and countries looking to relocate or invest in South Florida has put more pressure on this existing housing crisis. Finally, it is possible that the rise in construction costs due to supply chain issues fostered by COVID-19 is also helping to drive prices up as builders are unable to get inventory into the market at the lower price points. We see a real-estate frenzy with houses with median listed prices jumping 20-30% from a year earlier, which implies that ‘affordability’ is now farther out of reach than ever before,” she said.
To that end, NHSSF is employing the twofold approach of creating new, affordable products and providing mortgage and financing options to meet the rising market demand. “In partnership with Flux Architects, we recently submitted an RFP to the city of Miami, where we plan to develop eight units for low- and moderate-income buyers,” Henderson said. “In our existing inventory, we also have three lots for which we can build six single-family new construction homes with an initial price below $300,000, which is still unaffordable to many of our clients without additional subsidies. We are always in pursuit of land or houses that we can rehab and make available to low-wealth families. Further, NHSSF offers one of the best residential mortgage products available, called Champs, which helps put first-home buyers on the path of homeownership,” she said.
Writer: Felipe Rivas/Capital Analytics.
For the complete and original note that appeared on Capital Analytics on June 10th please follow the link: https://www.capitalanalyticsassociates.com/maintaining-housing-affordability-in-south-florida/
Photo Credit: Wynwood Senior Housing RFP Proposal | Client: NHSSF & SFCLT