Even Housing Designated As Affordable Is Out Of Reach For Many People, Yet Developers Say They Lose Money Building Them

A report from WHAM in New York. “Some homeowners in Henrietta experienced sticker shock as they received their latest property assessments, with many expressing concern over significant increases in their home’s assessed values. Mark Lewis, a resident of Henrietta for 40 years, said his home’s value has surged by 32 percent since 2020, amounting to an increase of nearly $120,000. Jerry Recore shared a similar experience, noting his home’s assessed value has risen by $78,000 over the last four years. ‘People are spending $50,000 over asking price, and that’s what they’re basing this on,’ Recore said. ‘How is that fair to us?’ Town Supervisor Steve Schultz explained that while the tax rate has decreased in recent years, the housing bubble has influenced the current situation. ‘The problem with this particular increase is you’re seeing a shift in the tax burden from the more expensive homes to the less expensive homes,’ Schultz said.”

WTVR in Virginia. “The dream of owning a home drove dozens of people to Virginia Union University on Friday morning for the Achieve the Dream Home Ownership event. The nonprofit allows qualified applicants access to a mortgage with no down payment, no closing costs, no fees, no mortgage insurance and a below-market fixed rate. The event, co-hosted by the Richmond Redevelopment and Housing Authority, invited public housing residents, Section 8 voucher holders, and first-time home buyers to begin the process of purchasing a home. ‘There are many more people like us, literally struggling day by day, month to month, trying to make ends meet. For the higher-ups to reach out to us and say, ‘Hey, we want to help you,’ that’s big. It’s big to me,’ Lakeithsha Franklin, a Henrico mother, said. ‘I want to have that legacy for my kids. I own my own home; I can give it to my kids, my kids’ kids. It’s going to pass down, so that’s the ultimate goal right there.'”

Aspen Journalism in Colorado. “The COVID-19 pandemic was just arriving in the Roaring Fork Valley when the threat of a virulent virus became an all-encompassing crisis in the middle of March 2020. The effects were not only physical and emotional, but economic, especially in destinations such as Aspen. By the summer of 2020, it was evident that a ‘great urban exodus’ was afoot — a term Aspen real estate broker Tim Estin used in an interview with The Colorado Sun during the height of the phenomenon. ‘All of a sudden, you start to see a surge in buying activity, and it’s like, ‘Whoa. Something dramatic is happening here,’ Estin recalled in a recent interview with Aspen Journalism. And he noticed that home prices were going up — at a much faster rate than they had been prior to the pandemic. Although those numbers might have popped up eventually, Estin thinks the pandemic initiated a ‘quantum jump,’ pushing the upvalley housing market a decade into the future. ‘COVID seemed to be the great accelerator,’ Estin said.”

“Homes and condos in the Roaring Fork Valley were already expensive — and, in most cases, already on an upward trend — in the five years prior to the pandemic, 2015-19. But between 2020 and 2024, those prices increased on a much steeper slope, even when adjusted for inflation. In some cases, median prices grew two to more than six times faster in the five years after the pandemic ‘accelerator’ went into effect. Consider a single-family home in Basalt, for instance, a category and location that experienced one of the most staggering price hikes of any community located along Highway 82. Between 2020 and 2024, the median sales price spiked more than 140% in raw numbers, on a consistent upward trajectory; even when all amounts were converted to 2024 dollars, the price more than doubled. Estin has said that the Aspen market seems to be stabilizing after that peak-pandemic boom. Data for some other communities such as Carbondale and Glenwood shows some tapering off as well, at least for single-family homes. Still, prices remain much higher than they were five years ago across the board. To afford a home in Aspen, a buyer has to be in the ‘1% of the 1%,’ Estin said.”

Honolulu Civil Beat. “At a meeting of a state body charged with economic development and affordable housing, a developer told officials about a problem. Gentry Homes is building a 390-unit development, a mix of single-family homes and townhouses, in Kalaeloa on Oʻahu’s West Side. Under state rules, at least 20% of the development’s square footage must be reserved for affordable units. The problem, Andrew Kamikawa of Gentry Homes told a Hawaiʻi Community Development Authority board, is that affordable units Kaʻulu by Gentry are selling about half as quickly as market-rate units, and that’s slowing down the whole project. The reason, Kamikawa said, is that market-rate units are priced too close to the affordable ones — or ‘reserved’ units, in the development authority’s parlance.”

“Kamikawa said buyers are choosing market-rate units rather than the affordable ones, which require that they live there and don’t sell for five years. The solution? Raise the price of market-rate units in upcoming phases of the development. The hope, Kamikawa said, is that this ‘makes the reserved units more desirable’ in comparison. The company’s plan shows the peculiar math of affordable housing in Hawaiʻi, where even housing designated as affordable is out of reach for many people, yet developers say they lose money building them. The slow pace is holding up construction for the rest of the project, Kamikawa said. The development was supposed to be complete by 2026, but that’s been pushed back a year or two. ‘We don’t have the financial means to keep building if we have standing inventory,’ he told Civil Beat in an interview.”

“Kaʻulu isn’t the only development where affordable units have sat empty. In fall 2023, more than a year after sales began, highrises Sky Ala Moana and The Park on Keʻeaumoku had sold only about 13% of their affordable units. Developers said that was because of a city restriction designed to prevent buyers from paying too much of their income towards housing. That rule said housing costs — mortgage payment, mortgage insurance, property insurance and taxes — could not exceed 33% of their income. While well-intentioned, developers said that rule meant few interested buyers were eligible for the units. The city revised that rule in the beginning of 2025; now there’s no debt-to-income limit.”

NBC Miami in Florida. “A group of residents at a Miami condo took to the streets in protest after they found out they were being asked to pay hundreds more a month for a special assessment. There were honks of support for protesters outside of the Terra Nova Condominiums as some residents took to the streets in protest Thursday evening. The problem, they said, is an upcoming assessment of $1.8 million. ‘There are a lot of older people in the community that can’t pay that kind of money,’ said Milton Rosario, a protester. ‘They gave us options. Either $900 a month or a one-time lump sum of $6,000.’ ‘This is an elderly community, there are people that have already retired and they don’t have the money to come up with this amount in so little a times,’ said Barbara Chang, a resident.”

Mansion Global on California. “A Beverly Hills home listing with plans laid for an exciting, futuristic facelift has just gotten a $7 million price reduction. The Trousdale Estates property currently holds a 1960s mid-century house that’s being marketed with conceptual plans for modernizing it. It was re-listed Thursday for $27.5 million, down from its $35 million list price in 2023. ‘The owners are just more motivated to sell now,’ listing agent Chantel Mehrabanian at Beverly Hills Estates explained. ‘They’ve owned it for decades, and want to relinquish the property.’ This is the home’s second price cut: The 10,000-square-foot house with its accompanying sketches originally listed in 2022 at $45 million after its longtime owner and Iranian businessman Sion Shooshani died in 2020.”

From Mises.org. “The ponderous commercial real estate market continues to deteriorate. Bisnow.com reports, citing CoStar, ‘US banks reported delinquencies hit 1.57 percent at the end of last year, a rate not seen since the fourth quarter of 2014.’ Putting a number to the percentage, ‘The 1.57 percent delinquency percentage means more than $47.1B of loans would have been delinquent at the end of the year,’ writes Billy Wadsack for Bisnow’s Dallas-Fort Worth bureau. That’s an 88 percent increase from a decade ago. Delinquencies in CMBS (Commercial Mortgage-Backed Securities) are setting multi-year highs with $38B in arrears at year-end 2024, a 41 percent increase from the previous year end.”

“In the face of troubling news, those who work in real estate are taking a rosy view, as usual. James Robertson, Jr. writes in the latest Grant’s Interest Rate Observer. Fitch Ratings’s Melissa Che focuses on bridge loans (REBLs) whose issuance ballooned in 2021 to $45 billion from less than $9 billion the year prior. Artis Shepherd of Patterson Capital, LLC told Robertson, ‘Bridge lending shifted around this time into a fairly aggressive product. Some lenders were offering credit at 80 percent-85 percent loan-to-value ratios and underwriting loans based upon proforma rather than actual net operating income.’ Shepherd goes on to explain that 2021 bridge lender’s loose underwriting included debt service coverage of just 1.0 or 1.05 to pro forma numbers rather than the traditional 1.25 DCR (Debt Service Coverage Ratio). This has come back to bite lenders and REITs. Owners with lesser quality tenants (or none at all) will likely walk away. Office properties are not the only problem. Overbuilding of multi-family projects has put pressure on rents. Community banks hold $629.7 billion in apartment loans with $6.1 billion being 30 days or more delinquent. This is the most since 2012 the tail-end of the Great Financial Crisis.”

The Globe and Mail. “Tenants looking for rental housing in Canada may be encouraged by reports that show national rental rates continue to fall. Alberta, for example, is seeing rapidly declining rents in Calgary (down 7 per cent on the year) and slowing growth in Edmonton (up 3 per cent on the year) driven in part by a building boom that sparked ‘massive runaway growth’ leading to oversupply of rentable housing. Calgary alone appears to have increased its total rental stock by 10 per cent just in 2024, according to the Canada Mortgage and Housing Corp. Toronto and Vancouver retain the titles for most expensive asking rents, but both are seeing rent-price declines driven by floods of newly built condos arriving in the market.”

“Falling rents are contributing to difficult times for preconstruction buyers preparing to take delivery of close to 20,000 new condominium apartments that should finish in 2025, all of whom are staring down the barrel of expensive closing costs and rental rates that won’t cover their mortgages. ‘It’s ugly,’ said Ron Butler, principal broker with Butler Mortgage. ‘They are all wildly negative cash flow on the average unit, with an 80-per-cent mortgage.'”

From Domain News. “Hundreds of property owners are selling their units at a loss in a handful of high-density neighbourhoods, new figures show. The apartment pain bucks the trend as most property sellers in Australia make money, CoreLogic research found. Of the properties that made a loss, almost one-fifth were in just three regions: inner Melbourne units (734 losses), Parramatta units (256) and Ryde units (163). A burst of unit development in the 2010s financed by investors has weighed on capital growth, the research house found, then investor demand in these areas waned once it became harder to borrow money.”

“By local government area, losses in Melbourne were concentrated in the Melbourne City Council area (44 per cent of all sales), followed by Stonnington (30.3 per cent) and Port Phillip (24.9 per cent). In Sydney, sellers were most likely to lose money in Parramatta (24.2 per cent), Strathfield (23.2 per cent) and Ryde (22.7 per cent). In Perth, 18.3 per cent of sales in the Perth LGA lost money. ‘We do have an increase in loss-making sales, but it’s increasingly concentrated in these select few markets which are mostly investor-owned property and mostly high-density units,’ CoreLogic head of Australian research Eliza Owen said. ‘It’s a combination of a lot of high-density development that ended up being an overhang of supply for a channel of demand that got cut off mid-way through the 2010s. And it was building for a consumer that is no longer as prevalent in the market.'”