Increasing interest in hotel conversions into rental housing properties indicates the pandemic-led effect on the American realty market. Investors are looking to acquire foreclosed or rundown properties at lower prices says Maxwell Drever. At the same time, they want to tap into the persistently rising demand for affordable housing for families with 60% to 120% of the area median income (AMI). Nearly 19.66% of hotels couldn’t clear their debt in 2020, which was higher by 1.52% from the previous year. Before the pandemic, hotel construction projects had flooded some cities, creating a room glut. While most of them benefitted in the usual conditions, prolonged travel restrictions and stay-in-home orders changed the entire game for a large section of them.
On the other hand, the shortage of affordable housing pushed financially constrained low to median-income households into the risk of homelessness. These people already struggle to save money as they spend more than 30% of their income on accommodation compelled by the lack of good options. People from housing sectors like Maxwell Drever analyzed situations and came up with an innovative idea to solve the crisis. They spread awareness around converting closed or rundown city hotels into affordable housing. But what led them to this?
The everyday challenges of middle class working families
Police officers, firefighters, teachers, retail clerks, and others form an integral part of any community they serve, but they fail to find a home in the same place where they work due to steep rental prices. As a result, they travel long distances away from urban areas. It limits them from spending on other sectors like education, healthcare services, etc. While it is not a good scenario for the low-income working population, without any doubt, communities and the country would also have their fallout. Since these people require housing support to cover basic human needs like this, it is everyone’s responsibility to come together and contribute.
New construction demands higher expenses due to lengthy processes and various development costs, making it challenging to offer units below market rate or affordable rent. According to Maxwell Drever, hotel and housing structures have similar amenities, safety and security needs, etc. Hence, redevelopment and supply of cost-effective livable units will be much more comfortable and faster.
Why is workforce housing in focus?
Low-income or poor households get subsidized options. But middle-income working class doesn’t get access to them because their earnings exceed the eligibility criteria. On the other hand, cities remain out of reach for their expensive rental demands. So they suffer the most. Some experts took notice of this situation and picked this niche.
However, plenty of things is still there to fall into place. Housing trust funds, hotel repurposing, zoning laws, community awareness, tax credits. And other steps can motivate hotel owners, investors, and developers to dedicate their time and energy to this. Once it picks pace, the supply and demand gap in affordable housing for the middle-income population. May reduce and help working professionals find some relief. That’s why it is worth exploring this creative solution and fixing the problem at both ends.