Shortage of For-Sale Housing Accessible to Moderate-Income Buyers is Explored in New Report from Urban Land Institute and RCLCO
April 17, 2019
For more information, contact Trish Riggs, 202-679-4557; [email protected]
WASHINGTON (April 17, 2019) – The shortage of housing affordable to moderate-income home buyers – including first-time buyers — and solutions to increase the supply are explored in a new report from the Urban Land Institute’s (ULI) Terwilliger Center for Housing and leading real estate analytics firm RCLCO. The report, Attainable Housing: Challenges, Perceptions and Solutions, is being discussed today at ULI’s 2019 Spring Meeting at the Nashville Music City Center in Nashville, Tennessee.
Support for the report was generously provided by ULI Trustee and ULI Foundation Governor Robert M. Sharpe, managing partner of Rancho Sahuarita Company in Tucson, Arizona. “As master-planned community developers, we have attempted to find and implement the best, most sustainable ways to meet the housing and community lifestyle needs of the first-time homebuyer,” said Sharpe. “With rising costs, lack of available skilled labor and increased regulations, we have seen firsthand how difficult it can be to deliver product for this growing market. This report highlights the insights from developers and builders across the country in order to share best practices and lessons learned on achieving attainable housing. “
Attainable Housing: Challenges, Perceptions and Solutions is a study comprised of real estate economic data and two surveys: a national consumer preference survey, conducted by RCLCO, and a survey of ULI’s Community Development Council members, a group of real estate leaders who share best practices in the planning, financing and development of both traditional and non-traditional master-planned communities throughout the U.S.
The RCLCO survey found that consumers at all income levels value location and amenities more than large homes or lower-density housing. Although they want typical amenities such as a fitness center and trails, package receiving (for e-commerce) and nearby arts and culture activities are considered “very” or “somewhat” important, a finding that tracks closely with trends outlined in ULI’s latest Emerging Trends in Real Estate® report.
In the Community Development Council survey, members cited several challenges to delivery of attainable housing, including:
- The cost of capital;
- A lack of building efficiencies;
- Limited availability of buyer financing; and
- The high cost of materials.
The report finds that even though attainable housing represents as much as 60 percent of market demand in some markets, supply constraints are driving up prices on virtually all for-sale housing, and are causing lower cost, entry-level product to all but vanish. Larger, less affordable homes represent a growing share of the market and contribute to a lack of housing supply at lower price points. This trend of bigger homes with multiple bedrooms has coincided with a trend of decreasing household sizes, creating a growing g mismatch of product to demand, the report notes. Nearly 50 percent of delivered homes are four bedrooms or more, while less than 10 percent offer one and two bedrooms. Additionally, multifamily permits have shifted from for-sale products to products for rent.
The report provides several recommendations and strategies for increasing the affordable housing stock:
- Continual product innovation to improve offerings,
- Combining product types in developments,
- Lifestyle-choice messaging,
- Entitlement and design commitment, including retrofitting older homes and looking at how future land deals can provide multiple segments of attainable housing within neighborhoods to maximize absorption,
- Creating small homes or simplified versions of their core brand,
- More “missing-middle” attached housing, and
- Building more high-density detached (or cluster) housing.
“It is an important as ever for the industry to build all types of housing, and especially to find ways to build nonsubsidized housing for middle-class buyers,” says the report. “Ultimately, this type of housing – attainable housing – will relieve the current downward pressure on the market that has kept renters from becoming homeowners and has made housing increasingly unaffordable for Americans at lower income levels.”
About the Urban Land Institute
The Urban Land Institute is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the institute has more than 43,000 members worldwide representing all aspects of land use and development disciplines. For more information on ULI, please visit uli.org or follow us on Twitter, Facebook, LinkedIn, and Instagram.
Since 1967, RCLCO (formerly Robert Charles Lesser & Co.) has been the “first call” for real estate developers, investors, the public sector, and non-real estate companies and organizations seeking strategic and tactical advice regarding property investment, planning, and development. RCLCO leverages quantitative analytics and a strategic planning framework to provide end-to-end business planning and implementation solutions at an entity, portfolio, or project level. With the insights and experience gained over 50 years and thousands of projects – touching over $5B of real estate activity each year – RCLCO brings success to all product types across the United States and around the world.
About ULI’s Terwilliger Center for Housing
The ULI Terwilliger Center for Housing conducts research, performs analysis, provides expert advice, and develops best practice recommendations that reflect the residential land use and development priorities of ULI members in all residential product types, with special attention to housing affordability. The Center integrates ULI’s wide-ranging housing activities into a program of work that furthers the development of mixed-income communities with a range of housing options. The Center was established in 2007 with a gift from longtime member and former ULI chairman J. Ronald Terwilliger. The Center’s activities are also made possible by contributions from the ULI Foundation, individual ULI members, and charitable foundations.