The housing crisis brings into focus the issue of affordability accompanied by the housing shortage. It will be wrong to look at the housing crisis as a problem for the low and medium-income groups only because housing affordability is a national problem for the US. However, the magnitude of the problem is much more in the affordable housing sector that witnessed high demand due to shifting demographics and cultural patterns, confirming Maxwell Drever.
The housing shortage was triggered by the need to stay close to the workplace. As most workplaces are in cities with exorbitantly high land costs, increasing construction costs, and construction materials, developers cannot create low-cost housing. As a result, more people are renting houses rather than building their own homes, which increases the demand for affordable housing.
To overcome the affordable housing problem, it needs some innovative and creative thinking to make the picture look brighter in a few years.
Remove regulatory barriers to new home construction
Maxwell Drevermakes a strong pitch forreducing or removing regulatory barriers to building new apartments and homes. The private and public sectors are working to achieve better regulatory policies that encourage building more homes for affordable workforce housing. Some states like the state of Oregon and the City of Minneapolis have taken steps to eliminate single-family zoning as a measure to remove the regulatory barriers in affordable housing. Rezoning has helped better utilize plots that can now duplex and triplexes instead of the single-family units.
Faster construction and low cost
Developers of affordable housing focus on productivity by reducing the costs and time of completion of the housing projects. Technical innovations have helped speed up the work of stick-built framing, which has drastically reduced the time taken for completing the framing from 71 to 14 man days. It translates into an astonishing increase of productivity by 500%, and the reduction in total build time is more than 30 days. The estimated savings per house is $25,000. The technological innovations help reduce errors, thereby reducing the involvement of skilled labor, which reduces the cost.
Creative financing for affordable rent and mortgage
A novel financial approach by substituting traditional security deposits paid by renters with low cost insurance is helping to make things more affordable for renters. The cost of insurance being as low as $4 to $7, it is up to the renter to decide whether to exercise the option. Paying the premium instead of the security deposit should suffice. Rhino, the company that offers low cost insurance, operates across all states of the US.
Better utilization of existing housing and land
The Covid19 pandemic has created huge opportunities to fill the gap in demand and supply of affordable workforce housing rapidly. As the pandemic has hit the hotel industry hardest with no signs of steady recovery, real estate investors like Maxwell Dreverare aggressively taking upconversion projects to convert hotels and motels into affordable housing.
As developers can acquire hotels at a much lower price, they can vouch for the affordability of the housing, be it ownership or on rent.
