Multifamily demand remains strong. Occupancy looks good. But the market isn't without challenges. The lack of affordable housing throughout the nation continues to increase, even as employment rates mend. We sat down with AMLI Development chairman Phil Tague and Alliance Residential managing director Cyrus Bahrami to hear their thoughts. Hear more from Phil and Cyrus (and many other industry leaders) at our Multifamily Annual Conference South event on July 21.

Every major metro area in the nation faces a lack of affordable housing. That's nothing new, but many mistakenly believe that as the economy strengthens and employment rebounds, affordable housing will not be in such high demand.

As Dallas/Fort Worth grows at unprecedented rates, the real estate market feels corresponding pressure on affordable housing. What exists isn't sufficient for supply, and building more to meet the demand is covered with red tape.

But simply building or converting more affordable housing is putting the cart before the horse. Affordable housing can't be addressed until financing and capital stack costs and incentives are addressed, Cyrus (above with his family) tells us. Those factors have made the numbers difficult to pencil. Significant increases in construction costs this cycle haven’t helped the equation.

With fewer federal dollars allocated to affordable housing, funding must come from the state and local level, nonprofits or private hands. And on a local level, Phil tell us, there's no true agreement on how to solve the problem, much less do anything other than scratch the surface.

Private money has a whole slew of financing obstacles too. Lenders have pulled back on construction debt (across all multifamily, not just affordable housing) and very few incentives make affordable housing capital worthwhile for developers, owners and operators.

Experiments (such as Turner Impact Capital) have made strides, but private money and nonprofits often can't make a wide enough impact to move the needle in the right direction.

The inability to address affordable housing will create further social tension, Phil tells us. Instead of using time and resources on the resurgence of employment, cities will soon have to dedicate those resources to affordable housing solutions.

Phil (above) says he has yet to see meaningful solutions, but he's pleased that the conversation is now occurring in virtually every major city.

Catch Phil, Cyrus and many others at our all-day BMAC South event next week. Sign up here.