Making Workforce Housing Work: As Financing Sources Dry Up for Development, Funds Look to Revamp Existing Supply
Workforce housing has become an increasingly popular agenda item among urban planners, government administrators and housing activists, who hope that by providing units with designated mid-market rents, they can attract and retain teachers, nurses and municipal workers in their cities. In recent years, institutional investors, too, have endorsed workforce housing projects and, in doing so, found socially conscious profits in the investment. The onset of the credit crisis, however, has been a game changer for this property type.
Suddenly, developers are struggling to find financing for new projects, owners who had borrowed at high rates are defaulting on their loans, and in a few instances, nervous investors have gotten out. But managers on the ground say there is a bright side to the distress — a supply that’s trickling to a halt and demand that is projected to overflow.
“It’s particularly because of the credit crisis [that] investments in workforce housing in