New ideas are working to save an affordable city
Don’t be fooled by the number of cranes rising above the skylines of many South Florida cities. While their presence certainly indicates a building boom in the region, it also highlights a problem that is hiding in plain sight—an affordable housing crisis.
According to a recent report from the Miami Urban Future Initiative, a joint project of Creative Class Group and FIU’s College of Communications, Architecture, and The Arts, Miami and much of South Florida’s tri-county area are facing a severe problem: the lack of housing affordability brought on by high housing costs and low wages.
A closer look at the affordable housing crisis in Miami
Miami certainly isn’t alone in having to deal with an affordable housing crisis; cities across the nation are also facing the same dilemma, to varying degrees. But all too often, the topic is the pink elephant in the room. We know it exists and we know it’s bad, but a discussion of low-income housing can ignite a NIMBY (“not in my backyard) debate involving neighborhoods that don’t want solutions in their area.
Not talking about it, though, not only perpetuates the problem—it makes it worse. That’s a big reason discussing “Miami’s Housing Affordability Crisis” is important. It gets the dialogue started. Although the picture it paints of the South Florida community isn’t always pretty, it is certainly significant:
- On a global ranking of least affordable large metro areas, Miami ranks 7th.
- While housing prices have rebounded since the Great Recession, wages and income have not kept up.
- Six in 10 employed adults are considered housing burdened, spending more than 30% of their income on housing. This statistic places Miami in the top spot on a national list of metro areas. Further complicating this issue is that more than half of the area’s workforce are low-income service workers, and therefore face the greatest challenge.
- The crisis is both geographically and racially concentrated, with minority populations having little income remaining after paying for housing.
- Housing in the region is expensive, putting Miami on a par with Washington, DC. Salaries in the two cities, though, are not the same—which the places Miami 2nd on a national list of cost-burdened homeowners and 1st on a national list of cost-burdened renters.
- More than in other cities in the nation, climate change and sea-level rise have the potential to only make the crisis worse.
CRE investors and developers can make a difference
Nevertheless, things aren’t all gloomy. In fact, the affordable housing crisis is creating a challenge and CRE developers and investors are working to meet it head-on. In recent years, more investors have expressed an interest in purchasing buildings that are part of an affordable housing program or are at a market-based low-value rather than starting such a project from scratch. Original development projects are simply too expensive.
While some of these for-profit investors are interested in raising rents, a majority is content to keep the rents relatively low. “Affordable” can also be a smart business practice. Generally speaking, affordable housing properties tend to be fully occupied and provide a dependable, consistent, and steady income. For many investors, low-income and affordable housing can even be a safer bet than a class A apartment building—as demand is continually strong.
Local solutions making a difference
For a better look at what’s happening on a local level, consider the 16 Corner Project in Miami’s Overtown community. There, a joint effort between a private real estate developer and the city’s Omni Community Redevelopment Agency resulted in the successful rehab of a 1950s apartment building.
The partnership was a cost-sharing marriage that combined development skill with agency financing, which resulted in high-standard, low-income housing—and the developer is still able to see a profit.
Additionally, the University of Miami’s Office of Civic and Community Engagement developed an online mapping tool that has identified more than 500 million square feet of vacant, unused, and under-utilized land across Miami-Dade. Much of the land is located along transportation hubs and is ideally suited for low- and middle-income projects. The tool, known as Land Access for Neighborhood Development (LAND), is easy to navigate, free, and updated every two weeks.
Looking for South Florida possibilities
When it comes to CRE investments, a lot of time is spent talking about and searching for those big-ticket items—pristine properties and big returns. The truth, though, is that all properties and all housing needs have value. Because, when done correctly, they provide for all members of the community.
The pros at Morris Southeast Group believe in the South Florida community. It’s why we live, work, and play here. It’s why we love it here.
To learn more about affordable housing property investment and development, property management services, or other investment opportunities, call Morris Southeast Group at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.
Tags: affordable city, CRE Developers, CRE investors and developers, Miami Urban Future housing, Miami’s Affordable Housing Crisis
