Frequent_Jelly_4138 t1_itwflk3 wrote on October 26, 2022 at 8:16 PM

There needs to be a real reason to build affordable housing or even just housing slightly below market rate. Right now the only way to profit off of it is by selling tax credits which can be great but often does not outweigh the profits from market rate dev. Another huge issue is that developers don’t want to build below market rate in area that they hold property because it devalues their other developments. It’s an unpopular opinion but I personally believe that affordable housing hurts more than it helps because developers will just go to other states and build to avoid regulation. That hurts our supply of housing this driving the cost up

Time_Yam301 t1_itxo88a wrote on October 27, 2022 at 1:34 AM

Developers couldn't care less who lives in their developments as long as they make money. A combination of subsidized financing, LIHTC, tax abatements - they all make affordable housing financially feasible.

You have to understand these same developers are using debt syndicated by Freddie Mac, the FHA, etc...

New housing development has never really been financially feasible without government intervention.

Frequent_Jelly_4138 t1_itzovmc wrote on October 27, 2022 at 2:13 PM

That’s incorrect. It is significantly easier to make money developing non affordable housing

Time_Yam301 t1_itzys2z wrote on October 27, 2022 at 3:19 PM

If you're anything but a small-time developer, you care about diversifying risk as much as you do about "making more money". No matter where you build affordable housing, once it is built, it is essentially no risk for a large developer/owner.

As for "ease", it depends on the market. In many places, it isn't legal to build new multi-family housing without an affordable component. In others, the entitlement process is actually easier. The underwriting can take more time, but that's what you have a bunch of $75K/yr analysts for.

As for the entitlement process, this varies a lot in Connecticut. Every municipality is different.

Frequent_Jelly_4138 t1_itzzd41 wrote on October 27, 2022 at 3:23 PM

That is very wrong, affordable housing may not have as much risk cash flow wise if it’s part of a government program, but there are forms of affordable housing where the government is not paying the rent. That is just as likely to default as market rate rent for less potential profits. Additionally. In a building that is 10% affordable housing, that 10% often times makes up over 40% of damage to apartments and common areas.