Design is Critical in Affordable Housing Demand
It's no secret that there is an extremely high demand for affordable housing in the United States. A report released by the National Low Income Housing Coalition (NLIHC) found that 8.1 million Americans spend more than half of their income on rent and utilities, there's a shortage of 7.4 million of affordable units and 11.4 million extremely low-income households account for 26 percent of all U.S. renters.
Unfortunately, developers simply can't recoup construction and land costs on a project that has below-market rents, especially in a world of high-priced commercial real estate in some of the country's most populous markets.
One of the remedies, however, could be found in design.
Affordable Housing's Recent Design History
The lack of inexpensive housing in the U.S. became especially pronounced during the recession. A University of Minnesota study found that 55 percent of renters in 2009 were paying more than 30 percent of their incomes on housing. At the same time, the number of those renting increased dramatically because so many people lost their homes.
The Affordable Housing Design Leadership Institute (AHDLI) started in 2010, and since then they've completed 50 projects through 2018. A number of developments started popping up around the country that incorporated sleek looks with cost-cutting measures focusing on sustainability. These homes would cut energy costs through solar shading, green roofs and building with materials like corrugated aluminum and cedar. A great example of cost savings is in West Hollywood, California where the 42-unit, solar powered Sierra Bonita multifamily development with ground-floor commercial was reportedly built for only $20 million.
The project seems to fall in line with an extensive HUD report on the issue that pointed out, "Architecture is not a matter of taste or mere aesthetics. Design quality is crucial to good affordable housing. The skillful organization of interiors, views, public areas, outdoor spaces and even facades is especially important when budgets and square footage are at a premium."
Design Stressed in the Low-Income-Housing-Heavy States
Despite its relatively high cost of living, Massachusetts is the leader in the area with 46 units per 100 low-income residents (compared to California with only 21 units per 100 residents), according to NLIHC. This is further spurred, in part, due to MassHousing's $100 million Workforce Housing fund.
Part of the fund goes toward adaptive reuse being incorporated into a project in Haverhill, about 35 miles north of Boston, that will transform a blighted building into 62 units of affordable and workforce housing. Another project, in East Boston, will upgrade 111 units in buildings that were constructed over 40 years ago. In historic and dense Cambridge, a 16-unit building is going up that will attempt to incorporate the surrounding architecture at a $22.6 million price tag.
Meanwhile, Ohio — with 43 units per 100 — has detailed design standards through its Ohio Housing Financing Agency. It prefers projects that use "durable materials that reduce long-term maintenance costs" and are high quality. Adaptive reuse is being worked into several of Ohio's affordable developments, as is the addition of other uses — such as commercial space — into the projects.
An Increase in Designer Input
It seems as though developers of these projects are now taking design into consideration more than ever and will continue to do so. An AHDLI study found that 95 percent of developers are now working more proactively with designers than they were, while 85 percent say that they take design earlier into consideration and 82 percent are asking for more architectural input.
If this trend continues, design in affordable housing will be more than an afterthought and it may even eliminate stereotypes of downtrodden-looking structures.
To learn more, visit key.com/affordable or contact your relationship manager.