In nearly every real estate sector, supply and demand rule. Developers pore over research reports that measure, as precisely as possible, a submarket’s demand. And upturns often end because too many developers read those same reports.
The supply of market-rate apartments never really dwindles, but the demand, at some point, always does. And at this stage in the upturn, the word “oversupply” is increasingly conjured, and often too quickly dismissed, by market-rate developers.
But affordable housing serves a different kind of market cycle. I’ve never heard an affordable housing developer utter the word “oversupply.” Those supply/demand factors are definitively rearranged for affordable housing developers—the demand is the horse, and supply is the cart.
The demand never dwindles, partly because the supply does.
Both dynamics feel like some sort of Greek tragedy, but with wildly different outcomes. If market-rate developers are Icarus, flying too close to the sun, all that’s lost is their personal fortune. If affordable housing developers are Sisyphus—constantly rolling a boulder up a hill, only to see it roll down again—then the fortunes of an entire nation are at risk.
Affordable housing is a race with no finish line, as this month’s focus on research will attest—or maybe it’s more accurate to say the finish line keeps getting moved farther away. The need is quantifiable, but the effect accrues on so many levels that it’s difficult to characterize it in numbers alone.
That’s why Donna Kimura’s excellent feature on Bud Clark Commons, on page 27, portrays a uniquely comprehensive measuring stick. The Portland, Ore., development quantifies outcomes in numbers, but it also demonstrates their effect on the human spirit. It measures health-care costs saved but also illustrates a payback that can’t be expressed in decimal points.
In short, the development “brought me back to life,” says one resident.
And that’s one demand that can never be oversupplied.
