Finding Solutions to the Workforce Housing Squeeze
Industry leaders share insights during the latest MHN Voices webinar.

Panelists discuss workforce housing during the webinar. Clockwise from top left: John Maddux, Sunstone Two Tree; Caitlyn Myhre, Freddie Mac; Juan Aguilar, Alliant Strategic Development; Ned Williams, The Michaels Organization; Jennifer Schrader, Caliber Cos.; and Suzann Silverman, MHN. Image by Michelle Matteson for MHN
In taking on the nation’s shortage of workforce housing, developers, investors and public-sector stakeholders face one of multifamily’s biggest challenges. The combination of high construction costs, tight capital markets and NIMBYism presents formidable hurdles.
But during a webinar moderated on Thursday by MHN Editorial Director Suzann Silverman, industry leaders offered insights into these issues and shared strategies for success.
There is a major need for housing in many up-and-coming markets which are facing critical shortages of essential workers—among them, nurses, teachers and first responders, observed Jennifer Schrader, president & COO of Caliber Cos.
“We’re pricing out a lot of the people who run our communities,” she said. “Their commutes are getting longer and longer and longer.” The phenomenon is an issue in such active Sun Belt markets as Arizona, Texas, Colorado and Nevada. As an example, she cited Scottsdale, Ariz., which has an acute shortage of nurses, but affordable homes are often an hour away from their workplaces.
Funding workforce
Under new guidance from the Federal Housing Finance Agency, the GSEs are undertaking a serious effort to preserve affordability, said Caitlin Myhre, vice president of risk distribution & credit, Freddie Mac Multifamily. “What that meant in 2023 is that any loan purchased by (Fannie Mae) or Freddie where a borrower agrees to set aside at least 20 percent of units at the property as affordable to renters making between 80 to 120 percent of AMI—and that affordability ratio is 30 percent of their income—could be counted as mission-driven business.” The GSEs are required to have at least 50 percent of their annual loan purchase volume consist of mission-driven business. Those affordable housing loans are exempt from annual caps.
WATCH HERE: How to Make Workforce Work for You
Funding tools in the broader market are relatively scare now, but that is largely a function of high capital costs, said Myhre. “We got squeezed” by the Federal Reserve’s rate hikes, reported Juan Aguilar, chief investment officer at Alliant Strategic Development. Once rates begin to come down, it could be a different story. Opportunity Zone funds have been a successful funding tool, Aguilar added.
Meanwhile, the number of institutional equity investors in the space is likely to grow, said Michaels Organization Executive Vice President Ned Williams. “You’ll see a whole lot more” of those investors, and soon, he predicted. Big institutions take their cues from such capital sources as Freddie Mac and Goldman Sachs, which have been early workforce housing backers.
Market by market
Key criteria, such as qualifying percentages of AMI, depend on the submarket, Schrader noted. “Putting a specific definition around what the median income is, or what the exact dollars are, doesn’t make a lot of sense.” she said. The more important question, she added, is what the local community needs. “We look at what can we put that’s complementary to the neighborhood, to the hospital, to the schools, et cetera, and really try and focus on that.”
For its part, Alliant largely finds the biggest challenges “in municipalities that have a high degree of NIMBY-ism or in regions where the development process is not streamlined,” said Aguilar. A prime example: Los Angeles is starved for affordable housing, yet nevertheless has an inefficient process.
Searching for solutions
Conversions present some opportunity for workforce housing, but they are hardly a tailor-made solution. To the contrary, commercial buildings are often poorly suited for adaptive reuse because of their design, from floor plates to wiring to plumbing, said Williams. “If you can find a hotel, that’s easier,” he asserted. Otherwise, buildings that aren’t the typical square or rectangular shape of an office property are preferable, as they could allow for more windows—“The wonkier the better.”
Central business districts, where many would-be conversions are located, are often nowhere near the retail and public amenities that residents want, said Williams.
These concerns could be mitigated by putting in ground-floor retail, but while planners often require commercial components, those tenants are rarely profitable. “They are an amenity, they are not money-makers,” said Williams. “We put them in when they are needed.”
If there is no requirement for a business, there are other options for a ground floor. “If we don’t get a commercial tenant, it can be live/work space,” said John Maddux, CEO at Sunstone Two Tree. “If it’s residential, you have to address the ground-floor security issue.”
Creating mixed-income properties that combine market-rate and affordable workforce housing may also be an answer. “You can do it, you just have to be prepared to manage it,” said Williams. “It’s like you’re running the same complex under two different sets of rules.” For all its downsides, it’s a fix that may be worth a shot. Otherwise, the shortage could get worse and entire localities could suffer.
“It’s a horrific problem,” said Williams, adding that part of the trouble is that a great deal of high-end housing has been built in recent years and not enough affordable product. “It’s also, quite frankly, an opportunity.”