A recent article in the IBJ discussed the Indianapolis-adjacent areas in Hamilton County addressing a shortage of affordable housing with new developments and potential projects. As we’ve discussed in previous articles, there is a nationwide shortage of affordable housing, and our own backyard is no different. We take a look at some of these proposals, as well as potential solutions to the shortage of viable housing for the necessity-renter demographic, in today’s BAM blog…
Affordable Housing Covers a Wide Spectrum
People often mistakenly assume that affordable housing refers only to government subsidized housing, and this isn’t the case. Affordable housing is often one-and-the-same as workforce housing, which is typically B and C asset classes and in high demand by those necessity-renters. Teachers, entry-level workers, those in the service industry, and off-base military personnel are all examples of who might make up the workforce housing demographic.
The Local Info
For Hamilton County, the numbers paint a very clear picture of the problem. The IBJ article notes that the county’s workers typically have to commute from outside the county, because the average housing prices are far beyond the means of these workers. IBJ’s statistics show that up to 63 percent of county workers who earn less than $40,000/year are forced to live outside the county. Meanwhile, they list the average cost of a new single-family home at more than $313,000 and average rent on a two-bedroom apartment as $1,168. For many necessity-renter families, owning is out of the question and renting at those rates is beyond their budgets.
Possible Solution to (Local) Housing Shortage
According to IBJ’s data, the city of Fishers is focusing on those necessity-renters in the lower income brackets first. The city of Fishers and developer RealAmerica Development LLC announced a planned income-based property of 70 units. According to the article, the city waived $100,000 in fees, and the developer plans to use possible tax credits to build the apartment complex. Nearby Westfield, on the other hand, plans to build moderately-priced single-family homes; the plan would result in over 400 homes with the majority to cost between $100,000 and $200,000. Meanwhile, the city of Noblesville plans to build a mixed-use development, which will include 10 affordable units reserved for income-based residents. Although all these planned projects will add to the inventory of affordable housing in the area, the IBJ quotes one study (by HAND) as saying that Hamilton county actually needs up to 10,000 more affordable units to address the demand.
Freddie Mac’s Product May Help
As we wrote in a previous article, Freddie Mac has unveiled a new product designed to help with creating new workforce housing supply. Freddie’s new Non-LIHTC forwards product is geared toward both new builds as well as major renovations, with 10% of units having rent restrictions meeting FHFA rules for uncapped volume, and 80% of units having rent at or below thresholds based on FHFA designations (standard/high-cost/very high cost markets). We also profiled one project utilizing Freddie’s financing to totally renovate an old chocolate factory into a mixed-use space, that would include 130 residential units as well as office and warehouse space. This financing could be one more tool for helping create more workforce housing to fill the clear need, in our area and nationwide.
The BAM Bottom Line: Affordable housing, from lower to moderate income residents is in high demand but short supply nationwide. Our local communities are tackling the issue with some new developments as well as renovations in the works. Although it’s a good start, the high demand means more units are still needed for workforce housing. Freddie Mac’s new product is one example of financing that may play a role in adding to new affordable housing supply.
