JPMorgan Chase ranks No. 6 on this year’s AHF top affordable housing lenders list, having lent over $2.4 billion in permanent and construction loans to developments that serve up to 80% of the area median income (AMI) in 2019, up from $1.4 billion in 2018.
AHF caught up with Alice Carr, head of Community Development Banking, to discuss the debt market forecast for the coming year as well as key priorities and focus areas for the affordable and workforce housing markets.
AHF: What are JPMorgan Chase’s priorities for 2020?
Carr: The affordable housing crisis is ongoing across the United States. To help meet the growing need for affordable housing, we’re providing important financial tools for our clients, including construction and permanent loans, New Markets and historic tax credit financing, low-income housing tax credits, letters of credit, and other products to support community development. We’re also increasing the work we’re doing as the firm continues to grow and invest in cities, bringing top talent into new markets.
We’re following the needs of the industry, providing innovative solutions to real estate developers and investors, as well as being a part of the national discussion to think of broader solutions for new ways to drive affordable housing development and preservation. To make a lasting dent, the industry needs more businesses to participate, more philanthropic initiatives, and government policies that allocate more resources to bring new solutions for addressing this national crisis.
AHF: What is your forecast for the overall debt market for affordable housing in 2020?
Carr: Affordable housing is increasingly at the forefront of the national discussion. In addition to a wide range of industry players, we see many untraditional players, such as tech and medical companies, making commitments to affordable housing.
This year, I expect the strong demand for tax-exempt bonds to continue, and more states may hit allocation capacity. Therefore, there may be an increased need for recycled bonds and more market programs developed to deploy recycled bonds. The support from the general public for affordable housing subsidies will also play an important role in the expansion of the industry.
AHF: Many have been talking about a potential recession ahead in the next year or so. What impact do you think this will have on the debt market, and what advice do you have for borrowers in preparation for this?
Carr: Despite how late we are in the cycle, demand for affordable housing is constant and government support is consistent. We expect increased affordable housing construction as land prices decrease or resources wane. A slowdown in the cycle often spurs the need for affordable housing, competition becomes less acute, and developers have more opportunity to build and meet market demand.
AHF: Are there any other potential challenges you’re keeping an eye on?
Carr: Even with new resources from the public and private sectors, development is still hampered by permitting and zoning issues, land-use challenges, and rising construction costs. We work in a very creative industry, with industry players motivated to work together and help fill in the gap in affordable housing. I’m looking forward to seeing what we can achieve and the challenges we can tackle this year.
AHF: Workforce housing has been a priority for Chase. What do expect for this segment in the year ahead?
Carr: JPMorgan Chase has been committed to increasing affordable housing across the spectrum— from low-moderate income homes to workforce housing needed around thriving metropolitan areas. In particular, we’re seeing many cities looking at how to facilitate the development of affordable housing for those who make between 60% and 120% of the area median income. In addition to developing affordable housing for the neediest populations, we also need to focus on housing for the working middle class—what’s typically referred to as ‘the missing middle.’
AHF: Do you have any new focus areas to address the nation’s affordability crisis?
Carr: Affordable housing is a broader issue that’s supported by various businesses and groups across JPMorgan Chase. Over the past decade, our Community Development Banking business provided about $16 billion in financing for affordable housing projects across the U.S. While financing and investing is a key component to helping solve this issue, we also want to provide needed thought leadership and firmwide resources that create innovative models, helping drive lasting solutions. Where you live should not determine how you live. That’s why we are applying our community development expertise, data, and business and philanthropic resources to promote affordable housing near economic opportunity for everyone. Bringing together the full power of the entire firm, we’re able to provide financing and investment to help expand homeownership, support affordable housing creation and community development projects, and test new models to unlock smarter housing solutions.
