Workforce housing programs allow a convenient way of providing housing solutions to middle-income households at prices that are below the market rate. Some real estate managers, like Maxwell Drever, believe that it is one of the best ways to solve the housing crisis in the country while also managing the economic crisis.
While workforce housing programs provide numerous benefits for applicants, there are also certain downsides to them. Most of these cons come down to the challenges faced by those who want to invest in this industry.
Following are some challenges that you might face if you are planning on investing in workforce housing.
Despite workforce housing being a great initiative to provide affordable housing to people in need, it is still not as acceptable as you might think. Even in places where workforce housing is well established, there are people who believe that regulating private real estate development in such a way isn’t beneficial for public sectors. In fact, some communities have seen an ongoing conflict due to the unnecessary division among people who support this initiative and those who oppose it.
2. Development Issues
In most cases, workforce housing programs depend on new real estate developers to invest in affordable housing. Unfortunately, most investors would prefer to spend the same money on projects that are more profitable than workforce housing programs. In a strong real estate market, most developers and landowners would find it challenging not to invest in a profitable development over a workforce housing initiative.
3. Complex Administrations
A dedicated staff is required to create a workforce housing program that is successful and profitable for all stakeholders involved. This is a very long-term commitment. Not only does the staff need to stay up-to-date with the developer the whole time during the construction, but they also enforce program requirements and monitor homes. In weaker real-estate markets, the allotment of affordable housing may be simply too low for people to take up the administrative responsibilities required to keep it running in the long run.
4. Legal Issues
In general, workforce housing programs depend on the local government’s power of regulating the use of local land. The right kind of government typically uses this power to support workforce housing programs and the provision of affordable housing. However, this is an area of law that is seeing rapid development. Some recent decisions made by the federal court have limited the local governments’ power to support affordable housing. As a result, this industry may suffer in the near future.
Despite all of these challenges, one should definitely consider investing in the workforce housing industry. It may be a little difficult to overcome these challenges, but it is worth the effort. At the moment, the market is strong for this type of investment. And more importantly, your investment can help a family get a safe and comfortable place to live.