What’s in Store for Multifamily Housing?

Filed in Multifamily by on September 16, 2014 0 Comments
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Panelists observe as NAHB Chairman Kevin Kelly, second from right, discusses the multifamily market.

NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del., and Stillman Knight, president and CEO of The Knight Company and a member of the NAHB Executive Board, on Sept. 15 offered their insights on several topics related to multifamily housing during the Bipartisan Policy Center’s 2014 Housing Summit in Washington, D.C.

Participating in a panel devoted to multifamily issues, Kelly, Knight and other experts delved into a number of areas:

Housing finance reform:

—  Kelly: “It is vitally important for the Senate to act on the Johnson-Crapo bill” (S. 1217, the Housing Finance Reform and Taxpayer Protection Act of 2014.). By providing a federal government backstop to ensure a sufficient and consistent flow capital for both single-family and multifamily mortgage borrowers, he added that the bill would “preserve the 30-year fixed-rate mortgage and provide transparency and predictability in the marketplace.”

—  Knight: “Just because the legislation won’t move quickly, you can’t assume it does not matter, because it does.”

Is there overbuilding in the multifamily sector?

—  Knight: “We don’t know yet if overbuilding is happening. The market is changing. We used to say that roughly 30% of those entering the market would be multifamily dwellers. On an anecdotal basis, the strength of multifamily demand is much higher than it has been in the past.”

What are the demographic factors shaping demand going forward?

—  Kelly: “There’s an economic shift in demographics. Baby boomers are renting in record numbers. There’s also a growth in minority households and low- and moderate-income families that will require rental housing. There is currently a mismatch between the production and supply of affordable housing and demand.”

The need to rehabilitate existing housing:

—  Knight: “We have plenty of product out there that needs rehabilitation. The Low Income Housing Tax Credit is one of the keys. At the very least, we need to preserve the affordable housing we have created.”

—  Kelly: I currently have 2,000 units under renovation. Many of them are utilizing the 4% tax credit. Getting rid of it would be devastating.” He called on Congress to pass legislation (H.R. 4717) sponsored by Rep. Pat Tiberi (R-Ohio) that would permanently fix the 4% credit rate, which is essential for both rehabbing and preserving older affordable units or to purchase an existing property.

Other experts who participated in the multifamily roundtable included Michael Berman, principal of Michael Berman Consulting; Toby Bozzuto, president of The Bozzuto Group; and moderator Douglas Bibby, who is president of the National Multifamily Housing Council.

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