Top 3 Challenges Facing Affordable Housing Owners & Developers

Affordable housing is a challenging and complex endeavor for property owners, developers, and managers. There are several potential obstacles to overcome, including strict regulations, logistical issues, and the financial viability of development projects.

From sourcing building materials and meeting program requirements to dealing with potential opposition, here are some of the hurdles developers and owners can face when constructing and operating affordable housing units.

1. Community Opposition

Affordable housing projects can sometimes face opposition from members of the local community, who often express concern about issues such as property values, traffic, or increased crime. Property owners and developers may need to address these concerns in order to move forward with their projects.

The rise in “Not In My Backyard” (NIMBY) rhetoric in recent years highlights this challenge, as local homeowners often take advantage of rigid single-family zoning laws and regulations governing land use, square footage, and building height to pressure local legislators into denying permits for multi-family development. As Jason Furman, chairman of the Council of Economic Advisers, explains, “Zoning regulations and other local barriers to housing development can allow a small number of individuals to capture the economic benefits of living in a community, thus limiting diversity and mobility.”

2. Logistical Issues

While the need for affordable housing is greater than ever, recent logistical complications challenge developers along every step of the building process, from procurement and permit approvals to the construction itself. In many areas, the pandemic gave rise to municipal slowdowns that continue to persist, leading to lengthy backlogs and slow approvals. Foreign and domestic supply chain issues and manpower scarcity also remain a bottleneck for many key industries. While issues like port congestion and shipping container supply problems have largely been resolved, the ripple effects caused by sustained shortages are projected to impact the costs of materials and logistics in the near future.

Still, many builders are exploring new, innovative ways of working around these obstacles, such as increasing the usage of salvaged and green building materials or shipping materials by slower (but more reliable) overland freight methods.

__3. Maintaining Compliance __

Affordable housing is subject to many federal, state, and local regulations, all of which property owners and developers must understand and comply with to qualify for affordable housing programs and maintain their eligibility over time. These programs may require the maintenance of detailed records and reports relating to rent rolls, occupancy data, and income asset information for residents. At the same time, affordability requirements can involve adjusting rent levels and verifying resident income information. Affordable housing programs typically also require regular physical inspections of properties to ensure that they meet certain standards for quality, safety, and accessibility.

With Challenge Comes Opportunity

Owning and managing affordable housing is no simple task. From navigating complex regulations and securing funding to managing rising costs while maintaining affordability, there are several challenges to overcome along the way. However, the need for affordable housing is great, and owners who can meet these challenges can make a significant impact in their communities by providing much-needed housing to low- and middle-income households.

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