At a time when the housing market is still rebounding and the economy is still recovering, affordable housing developers are putting shovels in the ground.
A recent survey of more than 100 developers from across the country revealed that these firms started 256 developments, with nearly 20,000 units of affordable housing, last year.
The developers expect to do even more this year, projecting to start another 29,000 affordable units in 375 new projects, according to the Affordable Housing Finance survey.
The Top 50 developers and owners will be revealed in the April/May issue. Two additional lists will reveal the Top 10 firms completing acquisitions and rehabbing their properties.
A majority of the developers surveyed (53 percent) say the return of low-income housing tax credit (LIHTC) capital was the most significant event in 2011. That was followed by the availability of low-interest debt (19 percent) and the availability of federal stimulus money (15 percent).
Despite their lofty 2012 goals, they are stressed. A year ago, most developers were confident that finance conditions were still improving. Today, they feel that conditions will remain about the same or be worse a year from now.
Jim Grauley, president and COO of Columbia Residential in Atlanta, is among those who think finance conditions will hold steady. “Equity investors and constructions lenders are back in the market in a big way,” he said. “However, there is greater uncertainty about the Department of Housing and Urban Development and state and local resources for housing. These two effects balance out the position we were in in 2009 and 2010 with more stimulus resources but less private-sector appetite.”
These measured expectations of many developers are fueled by a number of game-changing issues that loom over the industry. Asked to select their biggest concern for 2012, 39 percent of all developers surveyed said fewer local and state resources. Many of these developers work in California, where the state recently killed hundreds of local redevelopment agencies that funded affordable housing development. A number of other states also face severe budget deficits or other significant housing-related battles. For example, in New Jersey, there’s a continuing fight over the elimination of the Council on Affordable Housing.
The potential elimination or changes to the LIHTC program by Congress (27 percent) was the next biggest concern, followed by the potential elimination or changes to other housing programs by Congress (15 percent).