Affordable Housing Has A PR Problem
Affordable housing has an image problem across North Texas, and misconceptions about its place in the housing universe remain a barrier to the creation of higher-quality rentals for middle-income Texans.
"One of the great problems we have in DFW is that we have experienced a lot of growth, so there are a lot of new jobs and new opportunities here, but the downside and the challenge to that is it has created a squeeze on housing," said Ryan Combs, senior vice president of affordable housing at developer JPI.
A 2019 report released by Hoyt Advisory Study and commissioned by the National Apartment Association and the National Multifamily Housing Council found DFW as a whole must construct 19,000 apartments a year to keep up with growing demand.
The biggest obstacle to solving the area's affordable housing problem is correcting how individuals, including area leaders, respond to suggestions that more affordable housing is needed in almost every DFW city, Combs said.
During a Bisnow webinar on DFW affordable housing, Combs remembered a personal discussion he had with a local city council member in which Combs mentioned the need for more affordable housing to serve police, teachers and other middle-income earners across the region.
"He said we have plenty of that, we don't need any more affordable housing," Combs said. "What he meant is we have substandard housing and old apartments that are bad, and we don't want any more of that."
Combs agrees no one should desire substandard housing, but he said there is a great misconception in which many believe affordable workforce housing is the same as subsidized housing or old apartments operated by landlords who are collecting premium rents in today's low-inventory market while managing relatively rundown properties from afar.
Combs said what cities are really protesting against is a situation created by a local housing crunch and a lack of supply for middle-income earners.
The median Dallas home price hovers around $400K, according to Redfin, while the median household income in the city is around $50K, according to city data.
This squeeze on working-class and middle-class workers has allowed absentee landlords of older housing units and complexes to let their properties fall behind in upkeep, creating a negative perception of what workforce housing is supposed to look like.
"The best way to pressure those guys is to put in new, high-quality affordable housing that is charging equal rents [to the older stock]. That is going to force that absentee owner to either invest or divest of those old properties, so redevelopment is the best answer to what affordable housing needs to be," Combs said.
Fannie Mae affordable housing director Angela Kelcher agreed that the public perception of middle-income apartments tends to bring out nimbyism in residents when new affordable housing is proposed. The solution, she said, is the development of a quality apartment stock that challenges society's idea of workforce housing when it comes to construction quality.
Kelcher said catering to middle-income earners in the affordable housing space is not always easy on the financing side. Challenges come in the form of rising land and labor costs, both of which are pushing construction prices higher and making it harder to fill gaps in financing upfront, she said.
Some developers are eschewing federal supplement programs altogether and, instead, creating new affordable products minus some of the usual bells and whistles.
"We are seeing a number of developers who are opting not to go into the Low-Income Housing Tax Credit program, and their rents are not as low, but they are finding parcels of land in areas where they can build a product that maybe doesn't have granite countertops or maybe is less amenitized and you have fewer finishes, but the price point for the renter is at an affordable point," Alpha Barnes Real Estate Services owner Hugh Cobb said.
One thing that is changing for the better within local city councils and communities is the realization that runaway housing costs pose a risk to local DFW cities that refuse to search for solutions.
"Every healthy community in North Texas realizes you have to have housing for everybody to be a healthy community from the bottom to the top," Combs said. "If you want to have a grocery store, you have to have places for 300-plus grocery store workers to live. And if you want sit-down restaurants, you have to have places for those [employees] to live."