The second quarter marked an overall strong period for the affordable housing market — despite a few setbacks — as several states passed new bills to help close the affordable gap.
Housing demand continues to rise amid job growth, strong consumer confidence, and climbing wages. However, builders are facing headwinds that could impact affordability such as increased costs for building materials, and strict regulations.
With the industry’s goal to meet the demand for 4.6 million apartments by 2030, we must continue to consider how new affordable legislation will impact the industry.
Below, we will explore the most significant affordable housing developments and setbacks of the second quarter, and trends to keep on your watchlist next quarter.
Will the Thrive Act “Thrive” or Thwart Affordability?
On June 14, House Republicans passed the Transitional Housing for Recovery in Viable Environments Demonstration Program Act (Thrive Act), which was designed to help people with substance abuse disorders obtain affordable housing.
The bill will set aside thousands of rental assistance vouchers for low-income people suffering from opioid addiction. However, opponents feel the bill actually worsens the affordable housing market crisis.
By setting aside existing vouchers for those suffering from opioid addiction, many other people in need are forced to wait longer for affordable housing, such as veterans, homeless people, seniors, and victims of domestic violence.
The bill passed through the House by a vote of 230 to 173; only 12 Democrats voted for it and seven Republicans against.
NYC Enlists New Affordable Housing Lottery Guidelines
New York City’s Department of Housing Preservation and Development (HPD) and Housing Development Corp. (HDC) made changes to the city’s housing lottery guidelines on July 1. The changes aim to solve several pain points for lower income, more vulnerable New Yorkers.
The guidelines will make eligibility criteria more clear, reduce paperwork, and minimize the impact of credit history on an application. The changes will also enact more protections for domestic abuse survivors. For example, domestic abuse survivors cannot be rejected for housing based on bad credit or inability to pay back debts.
While applying for affordable housing is still a difficult process, the July 1 guidelines aim to streamline the process in hopes that more New Yorkers will be able to qualify for one of the city’s new affordable units.
Dallas Passes First Comprehensive Affordable Housing Policy
Dallas City Council passed its first comprehensive housing policy on May 10 by a 15-0 vote. The policy aims to bring 20,000 new homes to 13 of Dallas’ 14 council districts.
The new policy will improve existing housing stock and increase housing production. It will also encourage homeownership in stabilization, redevelopment, and emerging market areas throughout Dallas.
While opponents of the policy contend that it will not help every neighborhood that needs it, most members agree that the policy is an important step in improving Dallas’ affordability issues.
Philadelphia Levies 1 Percent Tax on New Construction
Philadelphia City Council passed a bill on June 21 to impose a 1 percent tax on major renovations and most new construction. After heavy debate, the tax bill passed with a 9-8 vote.
While the bill levies a tax on new construction projects, the money will go toward mixed-income and affordable housing. The bill is a big step toward creating more affordability in Philadelphia, but opponents worry it will slow the city’s construction boom.
South Carolina Pushes for Affordable Housing
In June, Greenville, S.C., passed a new provision to The South Carolina Bailey Bill — which allows local governments to offer a property tax assessment for rehabilitation of low- and moderate-income rental properties.
The new ordinance encourages rehabilitation of affordable housing units, a big win for the city’s affordability efforts, considering land that is appropriate for residential development is limited in Greenville.
One Door Closes as Another Opens in California
A California state legislative panel rejected Senate Bill 827 on April 17. The bill would have addressed two major issues for the state: affordable housing and greenhouse gas emissions. SB 827 aimed to eliminate parking minimums in locations near rail and bus stops; it also would have allowed construction of buildings four to five stories tall within those areas.
Overall, the bill would have been a big win for the state in terms of reducing the shortage of homes that is estimated at 4 million. SB 827 also would have reduced the need for driving, helping the state reduce carbon emissions. Opponents of the bill argued that it treated small and large cities, like San Francisco, the same way.
However, while SB 827 did not pass, Californians will get to decide on affordable legislation that provides for the expansion of rent control during the next midterm elections. On July 2, California Secretary of State Alex Padilla announced that the state assigned Ballot #10 to the Affordable Housing Act. The measure was certified on June 15 after supporters gathered over 595,000 signatures across 58 counties in California.
Hawaii Aims to Preserve Housing in Maui
The continental states are not the only ones making significant strides for the affordable housing market; Hawaii also passed a new affordable legislation. On July 7, a new law passed to preserve affordable housing on the Valley Isle in Maui. Senate Bill 2293 allows Hawaii’s Board of Land and Natural Resources to create and preserve affordable rentals.
Amid a few setbacks this quarter, the outlook for the affordable housing market is looking brighter. Recent bills passed in major cities are expected to have far-reaching implications for the multifamily market — especially during a time when the average apartment rent is higher than what many households are bringing in on a monthly basis. While several states are making large strides with affordable legislation, the key for the industry is to keep this topic at the forefront of discussion in order to see progress in the nation’s affordable housing shortage.