Online Resource Illustrates Challenges to Developing Affordable Housing

Urban Institute and National Housing Conference have created an interactive webpage that illustrates the need for subsidy when charging affordable rents to low-income families. The tool highlights the gap between the cost of constructing and maintaining rental housing affordable to low-income households and the rents those families can afford to pay. The site introduces readers to affordable housing issues in America. It states that for every 100 extremely low-income households, only 29 adequate and affordable units are available. The site further explains the costs of development – covering items like acquisition costs, construction, and developer fees. The interactive tool then allows users to attempt to develop their own virtual 50- and 100-unit buildings to illustrate the challenges in developing low-income housing.

The online tool draws its data from the financials from a number of housing projects in Denver that sought affordable housing fund loans and tax credits last year. According to the data, for renters who make 30 percent of the local median income, or even 60 percent, new multifamily buildings were simply impossible to build without public help once you factor in the costs of acquiring land, paying designers, constructing buildings, maintaining them, and servicing loans.

Users will find that after lowering the design and development fees, paying the construction workers less, dropping the interest rate as low as it will go, spending nothing on maintenance, and even assuming that someone gave the land for free, the buildings still aren't feasible. The tool shows that without relying on government subsidies it is often impossible to build and maintain housing for low-income households.