In today's world, authorities at all layers of government, members of the real estate industry, and people concerned regarding housing policy and affordability are paying considerably more attention to the issue of workforce housing. It is a complicated issue since it is both a housing supply and also an affordability problem, which is compounded by the fact that the salaries of moderate and medium-income people have virtually been flat for the last 20 years or more.
Working individuals and families in salary ranges ranging from 60% to 120% of the median local income may benefit from a residential housing model that caters to their needs. For-sale or rental housing might be included in the definition. However, we normally consider worker housing to be rental housing. Workforce housing includes the development of new construction rental housing as well as existing multifamily value-add assets, which have been improved while maintaining the same moderate-income tenants & rental rates as they had before.
The gap between demand and supply
The disparity between the availability and demand of affordable housing is not a new issue, but it has become significantly worse in recent times. Due to the sheer high prices of land, labor, and supplies, developers have concentrated their efforts on the highest end of something like the residential market, or so-called class A luxury apartments, ever since the early 2000s. Furthermore, value-add developers have been snapping up class B and C apartment buildings, reducing the amount of affordable housing that is now available.
According to Maxwell Drever, an increase in the apartment market has occurred as a result of demographic changes, which has been especially noticeable among higher-income families. As a result of rising demand and limited availability, the stock of low- and moderate-cost rental apartments has been depleted, a trend that has had a particularly negative impact on nurses, firemen, police officers, and so on.
Options for workforce class
When it comes to employment, it is necessary for individuals to have the choice to reside close to their place of employment, especially those who are most beneficial to the local economy. Educators, emergency service personnel, nurses, and shop clerks are among the most important jobs, yet many of them discover that so much new and previously built housing is just out of their grasp due to the high cost of living. Property and development expenses are very expensive, particularly in metropolitan cores and areas near employment hubs, pushing individuals to reside farther away from their places of work and greatly increasing their commute times and expenditures in the process.
As per Maxwell Drever, there's more to this than just a high rate of return. Whenever the economy eventually experiences a protracted downturn, investors will want a safety net to protect them from stock market losses. The massive undersupply of worker housing in comparison to demand will primarily and naturally restrict portfolio risk while also providing investors with a passive additional income in the form of rental property. It provides a good return on investment while also acting as a buffer.
Published by Harris Scott