Affordability on the minds of housing experts gathered in Austin

Business leaders from throughout the real estate industry spent most of this week in Austin focused on solving the affordable housing shortage that is reaching crisis levels in Austin and most other major cities around the country. The draw for the roughly 1,000 visitors was the annual Texas Housing Conference, organized by the Texas Affiliation of Affordable Housing Providers to bring together lenders, agents, developers and others looking to add more housing throughout the state that is affordable to middle- and lower-income buyers.

The state’s major cities had already spent recent years grappling with rising property values making homes near jobs and transit corridors harder to afford, but a trifecta of federal tariffs on building materials, increased immigration policing and rising interest rates have caused even greater affordability headwinds, said Nicole Asarch, a TAAHP board member.

“We’re producing one-third of the housing units versus what we were seeing five or six years ago, which has made the cost pressure go even higher because housing costs have increased,” she said. “The impact of new federal immigration policies, where you’ll see half of your (subcontractors) jump out of the window and get off the job site when someone from immigration shows up, where are you supposed to get the Sheetrock-ers and plumbing abilities in a situation like that?”

The three-day conference at the Fairmont Austin hotel saw panels focused on legislative policy, navigating local government programs, taking advantage of state and federal tax credits, and strategies to secure investment in workforce- and affordable-level construction projects.

In Austin, the new Austin Housing Conservancy has attracted its first group of investors to fund acquisition of 1,000 units of workforce-level housing – defined as affordable for those earning 60 to 120 percent of the median family income – and City Council is expected to vote next month on a bond package for November that would include $250 million to build affordable-level housing for those earning up to 60 percent of the MFI.

Phil Melton, national director of affordable housing for Bellwether Enterprise, said three decades of federal and state programs have helped to keep the supply of low-income housing growing, even if at a slower-than-needed rate. The growing crisis, he said, is building middle-income properties that aren’t subsidized and won’t deliver eye-popping returns for investors.

“That means finding investors who have something of a mission focus, and getting the attention of large institutions willing to take a good, steady return over a longer period,” he said.

Melton’s company has participated in deals with the Housing Authority of the City of Austin to buy middle-income developments and freeze their rents so their prices don’t inflate beyond the means of what those in professions such as teaching and law enforcement can afford.

He said cities and counties also need to find ways to reduce fees and shorten the completion time for building projects, which add to investors’ and builders’ costs and make the projects harder to put on the market at affordable prices.

Affordability has also become a recent priority for Austin-based investment firm Noble Capital, which has signed on as a sponsor of Impact Hub Austin’s Affordability Accelerator.

Romney Navarro, leader of affordability efforts at Noble, said the firm’s loans concentrated in the lower- and middle-price levels have become some of its best-performing assets because of the stability and demand for those types of homes.

“The stuff we do in that medium home price has really become our sweet spot because there’s a large market demand but decreasing supply out there,” he said. “What we’re doing is rewarding entrepreneurs by giving them access to more (loan volume) for affordable products, while with a project that’s $1 million I’m going to take less risk and not commit as much. Those guys need to be educated that affordable housing is what we’re really interested in.”

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