NeighborWorks America has reached two milestones.
The housing and community development organization is celebrating its 35th anniversary and its network of 245 nonprofits across the country has surpassed 100,000 rental homes owned and managed.
The organization also continues to be a leading trainer of affordable housing and community development professionals.
CEO Eileen Fitzgerald talks with us about the housing market and issues to watch.
AHF: How do you see NeighborWorks changing in the next several years?
Fitzgerald: One focus has always been how do we support strong nonprofit organizations on the ground. Those organizations have changed in the last 30 years from when many of them started to now. They are much more disciplined around business and ensuring that the organization and their properties are around for the long run. There’s a focus on the portfolio and asset management of our organizations that have multifamily properties. We do a lot around that and that will continue to grow.
Going forward, we also see many challenges—an uncertain funding environment and questions about how things are going to perform. Having that core infrastructure of good financial management and properties that are well managed is a key through the cycles of up and down funding.
Most of us in this business know in our heart and soul that having a decent quality home in a vibrant neighborhood makes a big difference in people’s lives. How we measure those outcomes more consistently is also really important. We are working with others in the field, including Stewards of Affordable Housing for the Future, about how to think about measuring those outcomes. We’ll continue work with our network on the different intersections, especially between health and housing.
AHF: The NeighborWorks network just surpassed the milestone of having 100,000 rental homes. What trends are you seeing in the portfolio?
Fitzgerald: There are definitely lower vacancy rates, which is great from a financial management standpoint, but it also indicates that there is a lot of demand and people who need affordable rental housing who aren’t being served. We also continue to see an effort to preserve affordable (housing credit) properties after the 15th year or units that are at risk of converting to market rate. How does a nonprofit that is truly interested in affordable rental find the money to acquire these properties? We have several organizations looking into that.
AHF: Where is the housing market going especially on the multifamily side?
Fitzgerald: We are seeing reduced vacancies everywhere. Demand for quality affordable rental is definitely tight. Over the next few years, we are going to see more a divergence—markets that are going crazy as far as prices and recovery and other markets that are lagging behind. That worries us. Our organizations do a lot of work in submarkets or those communities that may be behind. When everything starts booming and there’s so much focus on that market, it is easy to forget about the communities that are not participating in the economic recovery in the same way but that still have dire housing needs.
We just met with some of our organizations. Across the board on multifamily, they are seeing substantial increases in construction costs, mostly attributable to labor increases. Anywhere from 15 percent to 30 percent. This is not just New York and California. This is also throughout the Midwest. There may have been a little bit of materials costs involve, but the vast majority was labor costs.
AHF: What issues have you been spending most of your time on lately?
Fitzgerald: We do a lot around homeownership as well as rental. There’s been a lot around QM (qualified mortgage) and QRM (qualified residential mortgage) single-family regulations coming out of the Dodd-Frank Act.
We also think about our nonprofits that are managing 100,000 units of rental housing being strong sustainable businesses. That’s a big focal point for us. We’ve been thinking about how they might work better together not necessarily at a merger level but shared property management or shared asset management or different kinds of geographic expansions. We facilitate that when groups are interested. We are also thinking about the health-housing intersection.
AHF: What issues should developers watch for?
Fitzgerald: Again, the opportunities and challenges in the health intersection is one. There are also interesting things happening in how public housing authorities and nonprofit developers work together. That’s market specific. Work is also continuing on how to engage social investment or community investment. A lot of that gets to how do we talk about the outcomes of good quality housing.
