Affordable Housing Moves to the Suburbs

By Bendix Anderson

Affordable housing advocates have begun to seek development opportunities in a new type of location: suburban towns.

Some suburbs have been welcoming of affordable housing development, but many have not. “Suburbs are far from monolithic,” says Andrew Jakabovics, vice president of policy development at Enterprise Community Partners.

However, receptive and unwelcoming suburbs alike present difficult challenges to affordable housing as high prices push such development out of the most desirable areas and local resistance slows or stops it from being built.

Yes in My Back Yard!
Some suburbs have made it their policy to allow a degree of affordable housing, often through inclusionary zoning rules, which mix new affordable housing with market-rate units.

Suburbs with such rules often tend to be older, inner-ring areas, though the motivations behind zoning policies differ. Some communities are concerned with inclusion and social justice. Others view affordable housing as economic development. “We’ve seen chambers of commerce support affordable housing in jurisdictions where employers are faced with turnover or lowered productivity as a result of housing challenges,” says Jakabovics.

Land Costs Push Developers Out
Even when a town is willing to accept affordable housing, the high cost of land can push developers out of bustling urban and suburban neighborhoods into less-desirable locations.

When development sites are available in high-cost suburban areas, luxury-apartment developers often leap at the opportunity. “They can pay more and move more quickly,” says Adam Oates, president of SunTrust Community Capital.

Many of the largest conventional-apartment developers now build high-end communities in suburban town centers, close to commuter rail stations and retail. To pay for the high cost of land, these developers often create mid-rise buildings with wood-frame construction over a concrete podium for parking. “That deal doesn’t pencil out for affordable housing,” however, says Oates.

In contrast, the economics of development often push affordable development into places where demand for housing is low, and the rents, too, are already low. “The areas where you’re seeing a significant amount of affordable housing product are areas where there are already significant amounts of poor people,” says Jeff Lawrence, senior vice president for Walker & Dunlop. “A lot of this is driven by land costs.”

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Source: Affordable Housing Finance