U.S. Cities Need a New Vision For Affordable Housing - And Business Can Help
Words by Grant Whittington
Nearly 50 million Americans have filed for unemployment as governments impose stay-at-home orders to slow the spread of the new coronavirus. While the number of cost-burdened renters reaches near record highs and the supply of low-cost rentals dips to all-time lows, the need for affordable housing is more urgent than ever.
Governments grappling with the housing gap recognize the massive scope of this problem, often leaning on private companies to fund developments and increase the housing supply for low-income earners. Investing $11.6 billion in affordable housing since 2007, few companies have solidified their commitment more than Capital One.
“It’s absolutely critical that we all play a part in it -— private companies, governments, as well as the philanthropic sector,” said Desiree Francis, vice president of originations and community finance at Capital One. “We’re all part of the same community and want to see our neighbors thrive.”
Capital One’s Community Finance team, comprised of investment and banking specialists, partners directly with housing organizations to provide more than $1.6 billion annually to both build new affordable housing developments and enhance existing units and communities. Since the banking giant began investing in affordable housing 13 years ago, it has financed more than 128,000 affordable housing units, creating 145,000 jobs along the way.
Demand for affordable housing “far outstrips supply”
The company has reinforced its commitment to improving access to affordable housing at a critical time. According to the 2019 State of the Nation’s Housing report from Harvard University’s Joint Center for Housing Studies, rental vacancy rates for affordable properties fell to 4.8 percent last year, an indicator that housing options for low-income renters remain thin. Despite the dwindling availability of inexpensive rentals — from 2011 to 2017, the stock for units rented at under $800 shrunk by 17 percent — new construction is failing to address this need. The Survey of Market Absorption reported that under 4 percent of unsubsidized multifamily buildings finished in the first quarter of 2018 rented units for less than $850.
“Demand far outstrips the supply,” Francis told TriplePundit. “Affordable housing developments in general — and [especially] in high-cost markets — tend to be fully occupied.”
Securing a low-cost or subsidized unit, particularly in high-need city markets like New York or Washington, D.C., can feel like winning the lottery, Francis said. But she and her team also recognize that their job isn’t over when residents turn the key to their new homes. Capital One has doubled down on its commitment to serve low-income renters, extending its investments well beyond construction through its Social Purpose program, as seen in places like Miami-Dade County’s Karis Village affordable housing complex.
A holistic approach to affordable housing
Perched just south of the Miami Zoo in South Florida, Karis Village opened its doors to 135 low-income and formerly homeless residents in March 2018, thanks in large part to an $8 million construction loan and $25 million in Low-Income Housing Tax Credits purchased by Capital One. This particular development, aligning with another one of Capital One’s core missions, allots about half of its 88 units to at-risk veterans transitioning out of homelessness.
Instead of walking away following the ribbon-cutting ceremony, Capital One awarded a $250,000 Social Purpose grant to Karis Village. The funds, to be spread out over a 10-year period, will provide residents with essential support services to enrich resident lives in their new homes. These services include addiction recovery programs, transportation assistance and peer-to-peer counseling.
“We look at our role not solely from the bricks of the buildings and properties,” Francis continued, “but by thinking about the residents and how we can make an impact.”
Beyond establishing programs to support the formerly homeless veterans of South Florida, the Social Purpose program has also invested in financial literacy courses and after-school programs at other properties across the U.S. In one instance, it set up a transportation system to take senior residents to their medical appointments and to the grocery store, Francis said.
Capital One is constantly looking to push the frontiers in how governments, businesses, and people address homelessness and the lack of affordable housing, Francis said. Housing policies and investments that approach problems more holistically are bound to be more successful, she continued. Policies and investments looking at the need for affordable living as solely a housing issue could fail to find permanent solutions for at-risk residents facing outside factors.
“When you think about individuals, as well as families, housing is not an isolated thing but part of other factors that families need to think about when deciding how to allocate the money that they have,” Francis told us.
Low-income families strapped with the burden of paying for rent, food, prescriptions, school supplies and other necessities are particularly vulnerable. Seemingly simple services, like those offered through Capital One’s Social Purpose program, can be the difference between living comfortably under their own roof or again facing the threat of homelessness.
This work is far from over
Affordable housing remains one of America’s most evasive problems. Before the coronavirus, the National Low-Income Housing Coalition (NLIHC) estimated that 8 million U.S. renters were severely cost-burdened, meaning they spend more than half of their income on housing, and it expects this figure to rise by around 1.5 million as a result of the pandemic and related job losses.
The need is clear and well documented: An estimated 4.6 million new apartment units will have to pop up in the U.S. by 2030 to meet the booming demand. Francis acknowledges the lofty goals and hurdles that lie ahead for Capital One and its partners but meets the challenges in stride.
“Though the problem may seem insurmountable at times, through advocacy, public-private partnerships, and the testing of new and innovative ideas, I’m proud that we’re delivering positive, equitable community impact,” Francis wrote in Capital One’s 2018 Corporate Social Responsibility Report.
This article series is sponsored by Capital One and produced by the TriplePundit editorial team.
Image credits: PhotoMIX Company/Unsplash and Capital One