Usually, the most important things to write about are also the most difficult. That is what I kept telling myself when I was researching for our recent series about the affordable housing crisis. From the outset, I knew that it was affecting so many lives and that the commercial real estate industry had a huge part to play in alleviating it. That was about all I knew. So, in my ambitious ignorance, I pitched the idea of a series of articles and podcasts that would help shed light on why we are in such an unaffordable state of housing in much of the country and what we could be doing to hopefully make it better.
What I learned early on was that there were a whole new set of ideas, constraints, and players in the affordable housing space than I was used to writing about in the commercial property industry. I also learned that the problem was so big, the task of making housing affordable to the masses so large, that there was no one answer. There are many and they all need to be done in unison if we are ever to stop the suffering caused by unaffordable places to live.
Luckily, I found some experts to help me along the way. I leaned on them to help me understand what can be done by governments, charities, and private entities to help bring the prices of housing down in the metro areas that need it. These same experts also became the subjects of our podcast Inside Affordable Housing. I wanted to show people not only the role the real estate industry plays in the crisis, but also the personalities working on it every day. Throughout the interviews, a common theme emerged: everyone had an origin story. Almost no one dreams of advocating for affordable housing as a career so everyone who chose it usually had some compelling reason to do so.
One of the first people I spoke with was Allen Feliz, Vice President of Affordable and Public Housing at MRI Software. I synthesized what I learned from him over a series of interviews into the podcast episode What Kind Of People Succeed in Affordable Housing?
Allen acknowledged that there is more money to be made in other verticals of the property industry outside of affordable housing. But I found out that what you might lose in pay you get back in satisfaction. So many people I talked to loved the fact that they could see a tangible example of the way that their work is helping others. They also benefit from the strong community that they have created. Many of the people I interviewed, unbeknownst to me, were on a first name basis with each other. Plus, they all seem really content with their choices. None of them ever talked about being stressed or overworked, something that comes up often in the traditional real estate sector. I have read study after study saying that altruism is directly correlated with happiness but I didn’t really believe it until I got to know these people.
Affordable housing pros are often part analyst, part policy wonk. Almost all of the housing that is designated as affordable is done so thanks to government subsidies and tax breaks (many in the industry call this “capital A” affordable). Because of this, many people working in the industry come from the public sector, including David Quart, with engineering services firm VHB, whom I interviewed for the podcast How Affordable Housing Affects a Neighborhood. He played a hand in a very well-known project called Essex Crossing. The mixed-use development was almost half a century in the making and was meant to right the wrongs of an urban renewal project that decimated a low-income Puerto Rican neighborhood on the Lower East Side of Manhattan. This project was referenced a few times in my interviews as a shining example of gentrification gone right (eventually).
As we know, every major real estate deal requires a team of people. But what I learned from Hara Perkins, a partner at the real estate legal firm Goulston & Storrs, is that affordable deals take a small army. In the podcast How Affordable Housing Deals Get Done, Perkins explained that since there were always so many levels of financing and so much government and community involvement in the process, these deals often had a lot of stakeholders. Just like any deal, all of the work, negotiation, and documentation has to culminate in one day. Perkins said that it often feels like you are throwing a large dinner party where you have to make sure everyone has a seat at the table in order to commence eating. Luckily, she comes from the art world where dinner parties are used like currency so I am sure she is an excellent hostess.
As much as affordable housing is a political issue if you think that problem can be solved by politicians, you are dead wrong. “Capital A” affordable has a large part to play in making housing affordable but it usually only helps the lowest earners. The unaffordability of our cities is a problem creeping into the middle class as well. Redevelopment, even for affordable housing, can also have the unwanted externality of displacing long-term residents. So many are looking for ways to create naturally occurring affordable housing (often called by its biblical-sounding moniker N.O.A.H). One way to do that is to create vehicles for investment in older buildings with the mandate to stabilize the rents. These funds can offer a very safe return that, even though it might be less than other property investments, also gives the investor a way to improve their communities. I talked to one of the pioneers of this approach, Mark Ethridge, CEO of Ascent Real Estate Capital, in the podcast How Capitalism Can End the Affordable Housing Crisis.
Oftentimes the best way to solve big problems is to break them down into little ones. What can feel overwhelming about the affordability crisis is that there is no real definition for what it means. One of the country’s most respected affordable housing activists, David Smith, explained that the focus should be on what you want the impact of affordable housing to be. In the podcast Is Homeownership the Goal of Affordable Housing?, Smith explained that when you start thinking about solving issues like housing stability and upward mobility the tasks at hand start to become more clear.
My goal for this series of podcasts was to understand what role the commercial real estate industry plays in affordable housing. While I certainly did that, I also learned that the people working on this problem are just as important as the policies that define it. We are not going to end the housing affordability crisis that we are in without smart, talented, and compassionate people. Hopefully this series will inspire commercial real estate professionals to get involved by investing in affordable housing stock, supporting pro-housing policies, or maybe even taking the plunge and going into affordable housing as a career.