New Developments: COVID-19 Musings
By Thom Amdur
4 min read
A Few Things I Think I Think
As I write this column, it’s mid-May and the two-month tally of new unemployment claims now exceeds 36.5 million. What is worse: this staggering total is likely an under-count since many state agencies responsible for processing claims have not been able to keep up with applications. A recent Federal Reserve survey found that 39 percent of households that were working in February and were earning less than $40,000 a year lost their jobs in March or the beginning of April. Given these statistics and the target demographic, owners and managers of affordable housing have been preparing for dramatic declines in rental revenue.
Based on admittedly anecdotal reports from conversations with NH&RA members, rent collections are certainly declining, but not yet in proportion to the number of jobs lost. Expanded unemployment benefits and other temporary government and charitable assistance are helping cushion the blow for the short-term. I contend that the investments NH&RA members have made in resident service programs have built critical infrastructure that facilitate the ability of many residents to identify and access critical benefits. Proactive social programming at a property level has been critical to helping vulnerable residents stay safe, access healthcare and nutrition and pay rent.
In a perfect world, Return on Investment (ROI) would not be the sole deciding factor on whether or not we provide resident services for vulnerable populations. Like puppies, BBQ and fine art, resident service programs are good in and of themselves. But I also think that when the dust settles from the Coronavirus, data will show that properties with resident service coordination will have better resident outcomes and will have performed better financially than those without it. If you want information about implementing a best-in-class resident service coordination program during COVID-19, I encourage you to watch our May 14 Member Town Hall (available on housingonline.com). You will be inspired and your portfolio and residents can benefit.
On a different note, I think housing affordability and affordable housing providers may find unusual new opportunities as the economy realigns in the post-COVID-19 world. For example, as major employers get more comfortable with larger portions of their workforce working remotely on a permanent basis (e.g., On May 13, Twitter announced it will allow remote work…forever.), demand for real estate in the most expensive downtown markets may radically shift. In time, this may drive down the cost of land (or at least the acceleration in the increase) enough to allow affordable housing and workforce housing developers to compete more equally with luxury and commercial developers.
Additionally, hospitality, commercial, retail and/or student housing real estate transactions that have gone south because of COVID-19 could be reborn as community development transactions. While this may take some visionary zoning changes, creative architecture and outside-the-box financing strategies, where there is disruption there is also opportunity, be it a new source of permanent affordable or workforce housing or temporary housing for the homeless. We are still early in the crisis and it will take time for deals to actually unravel and for these opportunities to present themselves. We would do well to start thinking now about what policy solutions would be necessary to facilitate the transition of at-risk properties in high-opportunity jurisdictions into their 2.0 lives as affordable housing and community development projects.
Three months in, we are still very much at the beginning of the COVID-19 pandemic. Once the critical health crisis is addressed, there is likely to be a long economic tail.
In the meantime, we want to do more than just survive (literally and figuratively) the virus; we also want to lay the groundwork for new ways of doing business and be nimble enough to act on the opportunities that result from the fall-out.
I think these are ideas for us to noodle over, at least until things change again (as they inevitably will). I would love to hear what you think you think.
