The U.S. faces a huge shortage of affordable housing, an issue that has persisted for many years. Most recently, the New York Times reported that experts anticipate a “production cliff” to hit in about a year – meaning fewer affordable homes coming on the market at a time when there is already scarcity of this product. To discuss this issue further, Aaron Pechota with affordable housing developer NRP Group was interviewed and the following is part one of his two-part interview which will be published in its entirety on June 24th Weekender edition.
When asked why there is continued decline in availability for rental housing affordability, Aaron Pechota explained it didn’t happen overnight but rather started during The Great Recession when production was put on hold resulting in significant cuts to supply over five or six years followed by an increase from late teens to early 2020s attempting to correct lack thereof; however demand has been steadily increasing making it difficult reach equilibrium without appropriate government subsidies both federally and locally filling gaps associated with development costs .
Investors have traditionally been cautious about becoming involved with such projects due capping revenue potential yet returns are stable while default rates remain well below 1% nationally despite not showing increases value making them less attractive investments; however LIHTC program incentivizes banks as well as other community reinvestment investors proving successful thus far .
When questioned if recent turmoil within finance industry had any impact towards development , Aaron stated they haven’t seen much pullback from banks who continue lending under more conservative terms though local regional & national level commitment remains strong indicating no negative impacts so far .
