Maxwell Drever explains as the property costs carry on to increase and the real-estate cycle goes up. Several commercial real estate professionals all over the country will find it highly challenging to recognize the value-add acquisition scopes. And an exception to this rule happens to be affordable workforce housing.
The absence of accessible houses in several cities in the United States is expected. Hence, there’s no doubt that we need to do a much better job of expanding and enhancing the low-cost housing stock to middle-income earners. Maxwell Drever says that the present supply-demand dynamics have made the labor force housing properties in the markets that have shown growth.
Understanding the workforce housing
Given its definition, affordable workforce housing indicates the needs of the individuals and families that generally earn anything between 60% and 120% of the total area median income. Also, as per the latest research, the overall number of households in the United States went up by about 7.6 million between the years 2006 and 2016. Also, a number of the homeowners stayed flat, the count of the renters went up from 31.2% to 36.6%, presenting the increased rate of renter-ship that the country has witnessed in the last 50 years.
In addition, the workforce housing usually appeals to the residents who earn an income to qualify for the subsidized low-cost housing accommodations but aren’t sufficient to cater to the required earning threshold for buying the house or event rent the lavish apartments which have got multiplied in the current years.
The demand from the millennials
Since about 65% of the millennials end up paying the rent, the markets facing millennial in-migration possess a solid demand. The millennials are less inclined to owing homes than the earlier generations. As per the Urban Institutor report in 2018, the millennial homeownership rate is approximately 8% lesser than the earlier generations due to the generational preferences that merge with the renting, comprising of delayed marriage as well as having children at a late age.
Geographic preference is also a factor. Going by the report, the millennials want to stay near the cities where the housing supply is inelastic. Also, in the town, the millennials want to reside in counties having more fun with the urban environment, where home cost has gone up compared to the nearby areas.
Last but not least, Maxwell Drever says that in such markets with solid demand and a muted supply, the investors can come across compelling acquisition scopes that impose restricted risk and offers a scope to add value via proactive management and physical improvement practices.
Most third-generation multi-family owner often grows up involved in a multi-family real estate domain. It is essential to consider the value-add renovations. The best strategic investors today combine the two strategies: the controlled-growth ownership for the long run and opportunistic, innovative and creative approaches. And by doing so, the investors can enhance the current housing stock of the workforce housing, simultaneously generating risk-managed solid returns.