Multifamily affordable housing developers will be very active in 2016, according to Lancaster Pollard’s first-ever Housing Survey. The respondents predict a big growth year for multifamily affordable housing and their planned activities support this. The survey asked respondents to indicate how likely they are to pursue new construction, substantial renovation, acquisition, refinancing, tax credit allocations, and more. In almost all cases, a majority of respondents said “yes.”
Lancaster Pollard sent the online survey to “leaders in affordable and multifamily housing” in January 2016. Out of 172 respondents, more than three-quarters own, develop, or manage affordable multifamily or seniors apartments. About half of respondents are currently using Section 8 Rental Assistance at one or more of their properties. Half of respondents own, manage, or lease more than 500 affordable units, with a majority of them indicating more than 3,000.
The following key findings indicate developers’ plans for 2016:
- 8 in 10 are likely to pursue a new construction project
- 8 in 10 are likely to pursue a substantial renovation project
- 67% are likely to pursue a refinance project
- 64% are likely to pursue an acquisition project
- 68% are likely to pursue 9% LIHTC allocation
- 64% are likely to pursue 4% LIHTC allocation
“I was surprised by the number of respondents indicating they were looking to do 4% LIHTC deals,” said David Lacki, who leads Lancaster Pollard’s housing group. “With construction costs increasing, stagnant wage growth and gap financing difficult to find I found the result interesting.”
When asked about options for debt and gap financing, no clear source rose to the top. The survey results indicated that developers would pursue a number of available options for both.
Nearly half of respondents indicated that they need to spent less than $2000 per unit to maintain their organization’s competitive market position. Most do not foresee a change in their properties’ occupancy over the next six months and expect their rents to rise.
“I continue to be optimistic about 2016. Fannie Mae’s volume is up 53.62% in the first two months compared to last year and Freddie Mac’s volume is up 14.44% from January 2016 to January 2015. We also had a strong first two months in getting transactions engaged with our clients,” said Lacki.
Read the full report.
