Operating Expenses Both Up, Down for Federally Subsidized Housing, Says IREM Study
- Aug 25, 2014
Chicago—According to a recent study published by IREM, operating expenses in 2013 compared with 2012 for various kinds of federally subsidized housing decreased in the case of some kinds of properties, but increased for others. For example, operating expenses were down year-over-year within a range of $0.13 to $0.87 per square foot for two of the three types of Section 221(d)3 federally subsidized properties.
On the other hand, Section 8 Elderly/Handicapped housing experienced operating expense increases ranging from $0.15 to $0.69 per square foot over the same period. Also, depending upon building type, operating expenses for Section 202 properties, as well as Section 236 and Section 8 Family categories, either were up (within a range of $0.39 to $1.30 per square foot) or down (within a range of $0.16 to $1.88 per square foot).
The annual study analyzes operating data for more than 1,076 high-rise (elevator buildings), low-rise, and garden-style properties nationwide—containing 92,988 units—that receive one of six types of federal assistance: HUD Sections 202, 221(d)3, 236, Section 8 Elderly/Handicap and Section 8 Family and Rural Development Section 515. According to IREM, the study is designed as a benchmarking and planning tool to help owners and managers of subsidized housing make accurate comparisons of the performance of properties in their portfolios.
The study also found that utility costs for federally subsidized multifamily buildings were both up and down in 2013 compared with 2012. Increases ranged anywhere from $0.08 to $0.24 per square foot, while decreases ranged from $0.02 to $0.65 per square foot. Section 8 Family garden buildings reported the lowest utility costs, at $0.88 per square foot. Section 202 elevator buildings reported the highest such costs, at $1.98 per square foot.
Maintenance costs for all Section 8 Family buildings decreased from the prior year within a range of $0.02 and $0.09 per square foot. Maintenance costs for the other subsidized building and subsidiary types were both up and down, with increases ranged anywhere from $0.01 to $0.18, and decreases ranging from $0.02 to $0.19. Section 221(d)3 garden buildings reported the lowest maintenance costs at $0.23 per square foot. Section 202 low-rise buildings reported the highest maintenance costs at $1.16 per square foot.
Federally assisted properties reported the number of new tenants moving into their building (turnover ratio) in 2013 to be 16 percent of total apartments in an elevator building; 25 percent in a low-rise building; and 23 percent in a garden-type property, according to IREM. Conventionally financed apartments experienced a turnover rate ranging from 44 percent to 50 percent.