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The 10 Big Affordable Housing Trends You Can’t Ignore in 2021

January 8, 2021 | by Guest Posts

Categories: Affordable Housing

This is a guest blog post by Agnes A. Gaddis, a writer who specializes in creating in-depth content for businesses. We're sharing this post as it's a relevant, timely, and in-depth look at emerging affordable housing trends for the year.

Due to the current economic and global health emergencies, it's not hard to imagine that there may be increased anxiety about the state of the nation’s affordable housing. Given the impact COVID-19 has on the housing climate, what trends are likely to affect affordable housing construction and investments in 2021?

Trend 1: Government-Incentivized Projects in High End Neighborhoods

The dark clouds of the affordability crisis have been forming for a while in urbanized, tech-startup-friendly cities like San Francisco and Miami. COVID-19, and the consequent job losses it caused, has forced a lot of people to reassess their renting priorities.

Based on ApartmentList data, metros like Boise, Idaho are seeing a surge in new rental activity while there has been an increase in vacancies in high end cities like San Francisco. With the President-elect's $640 billion housing plan looking to reinstate programs like the Affirmatively Furthering Fair Housing Act, there's likely going to be an increase in government-backed affordable housing programs in the big cities.

Trend 2: Increased diversity in neighborhood social demographics

With nationwide calls for inclusion and equal-opportunities in housing, renters are becoming increasingly sensitive to diversity in their own neighborhoods. Currently, there is increased support towards housing programs like the Veterans Housing and Homeless Prevention Program which provides financing support for veteran-only housing projects.

Communities are also turning to inclusionary zoning to provide low to moderate-income families the opportunity to live in high-end housing. A 2015 review of inclusionary programs found that low-income residents of mixed-income communities experienced a range of benefits such as more job contacts, more race and gender diverse job networks, higher levels of occupational prestige with their housing, reduced stress, greater levels of self-esteem, and improved health and educational outcomes.

Trend 3: Affordable, Sustainable and Comfortable

Affordable housing, according to the United Nations’ Habitat Agenda, “means more than a roof over one’s head: It also means adequate privacy; adequate space; physical accessibility; adequate security; adequate lighting, heating and ventilation; adequate basic infrastructure, all of which should be available at affordable cost."

Builders want to balance the need for maximum unit count with minimum budget, while tenants desire eco-friendly spaces, larger kitchens and more extensive amenities. More builders are incorporating sustainable designs that are not only cheaper, but also more energy efficient and eco-friendly which bring down a home's utilty and maintenance costs.

Trend 4: Rent Caps

As many states implement rent and eviction moratoriums in response to COVID-19, many landlords are trying to break even in their own financial commitments while their struggling tenants prepare to pay months of missed rent. While eviction moratoriums are currently set to expire before February 2021, some states have implemented rent restrictions to curb rents spiraling out of control.

Though low and moderate-income housing units are largely not affected by rent caps, U.S. Department of Housing and Urban Development (HUD) guidelines already limit rent increases for Low Income Housing Tax Credits (LIHTC) properties. 

Trend 5: More Privatization of affordable housing

Many housing authorities across the nation have moved towards financing affordable housing projects, rather than building the housing themselves. Federal housing programs like HUD's Rental Assistance Demonstration (RAD) program are helping increase private participation in affordable housing development. 

Trend 6: Adaptive Reuse Projects

Increased interest in sustainability has led to the development of unconventional buildings using unconventional building materials. Prefabricated homes have become quite common with portions of the project built under controlled conditions, such as a factory, and then shipped to the building site. One sustainable design trend is Cargotecture, i.e. building homes using recycled shipping containers made of aluminum or steel.

There are also new projects involving re-adaptation and rehabbing of old asset classes like hotels. Michael Wilt, senior manager of external relations at TSAHC says, “Aging hotels are being converted into single-room occupancy developments to create housing for people experiencing or at risk of homelessness. Look no further than Fort Worth which is using CARES Act money to purchase an old hotel and convert it for COVID-vulnerable individuals experiencing housing instability.”

Trend 7: Increased Social Services in Housing Developments

Collaborations with non-profits allow for supportive services like youth after-school programs and adult employment training programs, providing help to households that need it. 

Kutakrock law firm's publication asserts that "many new projects combine on-site social services (job training, drug/alcohol counseling, health clinics) to serve the targeted tenant population (which includes chronically homeless, persons with developmental disabilities and transition-aged youth) as well as the neighborhood in general. These facilities serve as catalysts for revitalizing blighted and economically depressed areas."

Trend 8: Permissive Zoning

Lee Ollen of Merchant Capital, Chicago believes zoning poses a major problem for low income housing. "Many areas have strict zoning laws that prevent the development of anything larger than a single-family home. Changing these restrictions and opening up more land for development where it is most needed is the first and most important step in making any kind of headway on housing production."

As more and more leaders in government recognize our housing affordability problem, we may see significant changes in zoning laws with regards to affordable housing and the allowance of more housing construction in general.

Trend 9: Urgent Demand vs Low Supply

In Los Angeles, the city needs 516,946 affordable units to meet existing demand from low income renters. Amy Glassman, Partner in the real estate practice at Ballard Spahr law firm says, "The near-term need for more affordable housing is only going to increase and could overwhelm the industry. As investors and lenders try to prepare for some of the unknown, pipeline deals may be delayed, and we will likely need to find additional sources to cover financing gaps created by lower LIHTC pricing or similar adjustments."

Trend 10:  Easy Commutes.

One of the biggest factors affecting housing demand is the fact that more big employers are starting to embrace remote work. For instance, a COVID-19 impact survey of 2000 real estate brokers showed that 41% of brokerages shifted business entirely to work from home. Yet, workers may need to make the occasional trips to the office. They want to live in places that are at reasonable commuting distances to their places of work. Convenient transportation is something that would still continue to be important regardless of affordability.

For stakeholders in affordable housing, including developers, investors and the community, demand far outstrips supply. But the silver lining is that innovative new housing programs are being developed and local zoning laws and housing restrictions are being contested, meaning that now might be a great time to invest in affordable housing.


On the House blog posts are meant to provide general information on various housing-related issues, research and programs. We are not liable for any errors or inaccuracies in the information provided by blog sources. Furthermore, this blog is not legal advice and should not be used as a substitute for legal advice from a licensed professional attorney.

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