In the United States, housing affordability is becoming an ever-growing concern. Demand increasingly outweighs supply in affordable housing for a consistently growing segment of the population.
With the cost of houses and luxury apartments on the rise, and wages stagnant, a large percentage of the population in need of a home but unable to buy a house, is turning to a new trend in multifamily dwellings described as “workforce housing”. Forbes defines workforce housing as “housing that meets the needs of families and individuals generally earning between 60% and 120% of the area median income (AMI).”
Based on multiple data sources, evidence of Workforce Housing, in both primary and secondary markets, is becoming a growth market in real estate. This has prompted our Paradyme Investment Experts to focus on identifying relevant projects to offer our clients the latest opportunities in portfolio diversification strategy. “The benefits of such communities for owners, operators, and investors are numerous,” says Ernie Heymann, Chief Investment Officer for CAPREIT, which manages about 16,000 apartment homes.
“Workforce housing is a stable sector of the apartment business in the sense that occupancies tend to be a little bit higher than Class A because the demand is so strong and the supply is more limited,” Heymann says. “The turnover certainly tends to be lower, and the product’s a little bit less volatile to economic swings, whereas, in a recession, renters might be more likely to back away from high-end product.”
“No matter what happens in the economy or with any real estate market adjustments, people need a place to live. Workforce housing assets typically thrive in fatigued or thriving marketplaces,” explains Ryan Garland, CEO of Paradyme. Workforce housing is a great opportunity for investors and we are excited to bring these types of offerings to our clients very soon!
