Affordable Housing Grows–With a Little Guidance
- Apr 23, 2008
Single-family homes may be taking a beating–but multifamily affordable housing isn’t.
Just ask Fannie Mae. According to The Wall Street Journal, Fannie Mae and Freddie Mac are working to make up for the lenders who have pulled back from project funding, especially in the multifamily affordable housing market.
A spokesman for Fannie Mae said that the multifamily market’s low delinquency rates–a scant one-tenth of 1 percent in January–makes it a good bet for the government-backed agency, according to the Journal.
Fannie and Freddie aren’t the only ones working to increase affordable housing. As the subprime housing crisis continues, states–including New York–are spending more money on affordable housing programs.
In fact, most New York housing programs will receive an infusion next year, according to Newsday, including:
- Access to Home, an organization that gives property owners funds to increase disabled residents’ accessibility options, is slated to get $14 million. Last year, it received $5 million.
- A public benefit corporation created in 1985 called the Affordable Housing Corporation will receive $45 million to help low- to moderate-income residents get homes–a $20 million increase from what it got last year.
- The Housing Trust Fund Corporation, which last year received $29 million, will get $73 million for programs that sponsor new construction and pre-existing housing rehabilitation for affordable housing. (Developers interested in applying for the funds can here.)
However, not all states are making a push to fund affordable living. It’s not that they’re against it; but at least one state–Massachusetts–is on the verge of changing the way it’s done.
The state could soon pass an amendment that would require large affordable housing builders to pay construction workers higher wages–raising overall construction costs on some projects, the Boston Globe reported recently.
Developers would have to pay workers a "prevailing wage"–which means the Massachusetts Department of Labor determines minimum hourly rates on projects involving 75 or more units or projects with $25 million or more in overall development costs. Those rates can be twice as high as a project’s nonunion worker hourly rates.
Government projects already require the prevailing wage. Projects during 2002 to 2006 that paid the wage spent 34 percent more–roughly $60,000–on each unit, according to a 2007 study by the Massachusetts Housing Partnership.
As the economy sinks, higher wages will likely help builders; but it could cost the community by reducing the amount of housing being built.
One wonders if Massachusetts has really thought the wage hike through. Residential construction employment has declined in the past year–so will making higher construction costs mandatory for large affordable housing projects really help workers in the long run?
It’s a delicate balance–workers are battling the same higher food and gas costs affordable housing recipients are–but overprice our projects, and they’ll be out of work…