07 Feb Industry Leaders Look at the Year Ahead
Affordable Housing Finance asked six housing leaders to share their expectations for the new year.
Ismael Guerrero, President and CEO, Mercy Housing
This year is an opportunity to save affordable housing projects that were impacted by inflationary and interest rate pressures while positioning new projects for development in two to three years. We should build upon foundations that enable and accelerate affordable housing development. Our industry faced challenges in 2022 with supply chain disruptions, labor shortages, and increasing interest rates that delayed projects. In order to advance these projects and future ones, we need to work with political, municipal, and development partners to: 1. Encourage Congress and federal government supporters to create bipartisan tax credit expansion and reform; 2. Encourage local governments to prioritize funds from the Inflation Reduction Act that can close funding gaps for new development; 3. Work with local government partners on supply-side solutions that reduce costs and expedite development, including land-use, zoning, and entitlement reforms; and 4. Finally, we also need to invest in supportive services like health care, mental health, and child care that will help stabilize residents and improve their educational and economic outcomes. That’s how we will build more stable, sustainable communities.
Geoff Brown, President and CEO, USA Properties Fund
I’m optimistic about 2023 because our industry won’t endure the difficult challenges of the past year, from the dramatic escalation of costs—from building materials to labor—to the largest interest rate hikes in more than three decades. While there will remain financing gaps to be filled in order to make projects feasible, those gaps won’t likely increase as they did in 2022.
I’m also hopeful that the industry can get some legislation passed on the federal level that allows for more tax-exempt bonds and 9% credits, which would help pave the way for more affordable housing. However, there is still a lot of public and private capital available because of the enormous need for affordable housing. And, as an industry, we need to take advantage of this by continuing to work on creative financial models for both developing and preserving affordable housing.
Finally, I also expect more opportunities to provide much-needed workforce housing for the missing middle, which is greatly needed nationwide, especially in high-cost areas such as the West Coast and Northeast.
Sunia Zaterman, Executive Director, Council of Large Public Housing Authorities
In 2023, CLPHA will focus on equity through the lens of housing. We will be vigilant in protecting public and assisted housing funding in the fiscal 2024 THUD [Transportation and Housing and Urban Development] appropriations bill in light of spending cuts threatened by the new House majority and make the case for an expanded housing voucher program and the recapitalization of the public housing portfolio. While new legislative action may be limited due to the split Congress, we will be focused on ensuring that low-income families living in federally assisted housing benefit from recently enacted legislation to increase green investments and expand digital access. Our Housing Is initiative will continue to strengthen cross-sector partnerships that better align the housing, health, and education sectors with a priority on improving access to primary and mental health care and affordable digital connectivity.
Lori Chatman, Interim Co-CEO of Enterprise Community Partners
As we look ahead to 2023, economic stressors—a possible recession, high inflation, rising interest rates, and an ongoing affordability crisis—could have a major impact on the housing market, and particularly on lower-income and working-class families. But there are bright spots for affordable housing: Better buying opportunities could lead to higher production and lower costs; low-cost debt capital offered by Community Development Financial Institutions is increasingly sought after; growing bipartisan support for expanding the low-income housing tax credit could help create more rental homes in every community; and new resources from the Inflation Reduction Act will help make affordable homes more resilient against future disasters. The affordable housing industry is creative, resilient, and prepared to bring our full power to bear on the national affordability crisis.
Stephanie Wiggins, Managing Director and Head of Production for Agency Lending, PGIM Real Estate
We’re at a critical moment in time where the ongoing affordability crisis, combined with the uncertain economic environment, have spotlighted the need for affordable housing. The crisis is now top of mind for most Americans, and many are witnessing it firsthand, as tent cities pop up in their own communities. Looking to 2023, I’m hopeful that this heightened awareness—as well as the heightened focus on affordable housing in the industry—will result in greater action.
Fundamentals in the affordable housing sector remain strong, with high demand, high occupancy levels, and stable income. Of course, there will be headwinds as we navigate economic conditions, but the government-sponsored enterprises continue to provide stability in the volatile marketplace. In 2023, Fannie and Freddie will continue to require 50% of all loans to qualify as mission-driven production, and there will be an even greater focus on workforce housing loans. I’m very optimistic that by working together, we will make progress this year toward addressing the drastic market need.
Jennifer Leimaile Ho, Commissioner, Minnesota Housing
In 2022, Minnesota Gov. Tim Walz and Lt. Gov. Peggy Flanagan proposed a historic $1 billion investment in housing and homelessness, but, in the end, nothing passed the Legislature. Going into 2023, Minnesota has an enormous $17.6 billion budget surplus and a once-in-a-generation opportunity to make significant investments in housing. We need to invest in everything from homelessness prevention to rental to homeownership, including new construction and preservation. We are committed to racial justice and creating more equitable housing outcomes. Housing has always been a bipartisan issue, and the need for investments extends to every corner of the state. We need to go big so everyone can go home. We can do just that in 2023.