Published: Considerations When Investing in Real Estate

I published “Considerations When Investing in Real Estate” on @Medium

Tackling the Affordable Housing Predicament

 Renters and prospective buyers in the US have witnessed housing prices increase since the Great Recession. The COVID-19 pandemic has further exacerbated this trend. Low-income families have been particularly affected, as the shortage of rental homes has risen to 7.3 million in 2023 from 6.8 million in 2019. However, there are strategies that can help alleviate this crisis.

Promoting affordable housing is one solution. Local governments can offer builders tax breaks, reduced permit fees, and other incentives to encourage them to construct low-cost, high-quality homes. Local governments can also streamline the permit-acquisition process to create a favorable environment for builders and developers.

Embracing manufactured housing instead of on-site construction is another cost-effective solution. Developers build manufactured homes in factories and then transport them to desired locations for assembly. Expanding manufactured housing production can increase the number of affordable housing units, meeting the demand for rental units and homes, especially for low-income families.

Sometimes, prospective homebuyers struggle to meet home ownership requirements, leading them to continue renting, which drives up rental costs. Alleviating this pressure necessitates removing barriers to home ownership through practical steps, such as lifting restrictions on providing mortgage loans to purchase condominium units, promote the construction of more condos that could serve as an entry point for home ownership. Additionally, implementing policies such as down-payment assistance can help prospective buyers and reduces the strain on the rental market.

Governments at all levels can also assist low- and moderate-income families through subsidies for acquiring and constructing houses. The low-income housing tax credit (LIHTC) program addresses the housing crisis by offering incentives to developers and investors to create new affordable housing or rehabilitate units designated for this target demographic.

In addition to subsidies, preventing the loss of affordable housing is equally crucial. One way to do so is by providing support and resources, such as eviction prevention programs for renters to prevent homelessness. Such programs assist renters by offering financial aid, legal representation, and mediation services, and aim to address underlying issues. Moreover, with many affordable units at risk of becoming more expensive due to their affordability agreements expiring, governments can assist by offering incentives to help property owners keep the rents lower.

Another way to address the crisis is to comprehensively assess publicly owned assets, including underutilized or vacant lots, and designate them for housing development. Local governments can create a list of suitable vacant lots and sell or lease them at a reduced cost to developers of affordable housing. Local governments can also donate such lands to nonprofit organizations specializing in affordable housing projects. Montgomery County in Maryland has implemented similar policies, promoting low-income housing development on public land.

Affordable housing trust funds are also crucial financial mechanisms in major cities, offering funding and assistance for developing and preserving units intended for low- to moderate-income earners. These funds help bridge the financial gap between affordable housing development costs and available resources, such as private subsidies and LIHTC. Seattle and Philadelphia are among the cities that have used trust funds to bolster their affordable housing inventories.

Published: An Overview of South American Real Estate

I published “An Overview of South American Real Estate” on @Medium

Published: Risks of Real Estate Investments

I published “Risks of Real Estate Investments” on @Medium