Contractors are having trouble keeping up with demand for apartments, which in turn causes a shortage of affordable apartments. The cost of living continues to rise while wages and salaries remain the same. This brings to the forefront the need for affordable apartments for those looking to downsize or for the college student who doesn’t want to move home and can’t afford to own a home.
The Future of Housing in America: Government Regulations and the High Cost of Housing, a hearing discussing the increasing demand for multifamily housing units, heard testimony from Clyde Holland, the chairman and CEO of Holland Partner Group on behalf of NAA and NMHC regarding the challenges in the face of the rising demand for lower-cost housing for middle-class Americans.
His testimony listed several reasons why demand for multifamily units is exploding compared to single-family homes. These reasons include stagnant wages, supply-demand imbalance and hurdles and regulations in developing new apartments.
“Almost 75 million young adults are entering the housing market, primarily as renters. At the same time, Baby Boomers and empty nesters are trading single-family houses for rental apartments,” said Holland. “This combination of factors is forecast to lead to four million new renter households over the next decade.”
This division in affordability and availability of adequate housing is a concern to the construction industry. The cost to develop and build new multifamily housing units increases each year along with the maintenance on older buildings. However, median household income is almost the same as in 1981 if you look at it on an inflation-adjusted basis.
Frequently, new construction results in apartment buildings that are too costly for people to pay for rent. Ideally, new multifamily housing developments would provide the average working person with a space appropriate for their family size and amenities that suit a comfortable living, while remaining affordable.
To provide affordable housing to the millions of people who need it, solutions must come from the public sector. Policymakers need to create partnerships between private sector construction efforts and the local government. Reducing barriers to construction and creating incentives for building apartments in an affordable price range will create solutions. Unlocking land, providing value engineering and better financing could help solve this problem.
Americans work hard for their wages, and therefore deserve affordable high-quality housing, but currently the United States is not meeting that challenge. At Live Oak Contracting, we’ve got our pulse on market information and implement value engineering practices for our clients to ensure owners and developers get the best product for their budget, which trickles down to the tenant. To partner with us on your multifamily development, call (904) 497- 1500.