Arkansas citizens are finding it exceedingly difficult to find decent but most importantly affordable housing for themselves and their families as prices continue to rise. Maxwell Drever of drever capital management studied Arkansas’s affordable housing market and concluded that at the current rate of price increases, the problem will quickly spiral out of control for all parties concerned. There are several elements contributing to these problems, all of which are gradually becoming significant.
Residents of several Arkansas towns, such as Little Rock, are concerned about the availability of affordable workforce housing. Residents continue to ponder what they can do in their search for housing options that are close to their children’s schools as well as their own workplaces. The Arkansas suburbs were formerly thought to be affordable, but that is no longer the case. Rental prices, in particular, have risen to the point that they are equivalent to those in the state’s major cities.
A Wide Range of Issues
There are several reasons why housing prices are rapidly rising even in Atlanta’s outskirts. Factors such as rapid population expansion, infrastructure development, labor shortages, and building materials shortages are posing challenges for affordable housing projects in the area. The COVID-19 pandemic has wreaked havoc on construction supply networks, causing significant development delays.
Individuals at the Bottom of the Pyramid Face Increasing Challenges
The rising rental rates in Arkansas are causing anxiety, particularly among the low and middle income groups. This is the target demographic for affordable housing projects, but with prices skyrocketing, people can no longer afford to rent or buy these homes. Occupations such as nurses, service workers, early-career teachers, and newcomers to the workforce are among those who are struggling the most.
Shortage of Affordable Housing Units
Currently, Arkansas is facing a shortage of nearly 55,000 affordable housing units. This is a cause of concern especially with the extremely low-income families within the state. Across the US, almost 11 million families fall under this category. However, in the state of Arkansas, there are presently almost 107,000 people who are desperately in need of affordable housing units that are still extremely short in supply due to various reasons.
The median income in Arkansas is under $26,000 a year according to stats for the US Census Bureau. At the same time, average rents are around $650. This means that a significant chunk of the population is rent burdened as they have to pay more than 30% of their income in rent. With rental prices rising and the ceiling being pushed way above $735, there is little hope for the extremely low income individuals when it comes to affordable housing.
The authorities are concerned about this situation. With such significant growth, greater attention must be paid to prospects for affordable housing in the area. Arkansas is a developing state that witnesses a substantial influx of new residents. At the same time, extremely low-income individuals and their percentage is also on the rise. These are the families require affordable housing urgently.
Benefits of Investing in Workforce Housing During a Recession
The term ‘workforce housing’ refers to providing affordable housing for workers who can’t afford to live in the towns where they work. The primary reason they find it hard to live in these towns is the vast disparity between their income and the cost of housing.
Over the past several years, workforce housing has become increasingly popular. Workforce housing has numerous benefits, from providing families with affordable housing to earning a more stable income.
4 Benefits of Investing in Workforce Housing During Recession
The following are the four benefits you can get from investing in workforce housing during a recession:
1. Provides Affordable Housing
One of the best benefits of investing in workforce housing is it provides working families with affordable housing. Working families usually have a broad network and more than one working person. Generally, they have school-going children, and they need houses near a schooling district. This creates the perfect opportunity for you to invest in workforce housing.
In addition, these working families avoid long commutes, allowing themselves to go to work. At the same time, they need to perform other tasks, such as buying groceries, picking up kids from school, and so on. This means they don’t have much savings – the primary reason they look for workforce housing.
2. Provides Stable Income
Over the past few years, workforce housing has gained substantial popularity, and it’s no secret that this popularity will continue to rise in the future. Workforce housing will remain in high demand for the future.
Today, you can see numerous projects that can help boost your economy while securing long-term ways of earning a stable income. The rise of such projects is because undersupply is high in urban development markets. Due to certain laws on rents, people find it challenging to afford accommodations, allowing investors to earn more by investing in such workforce housing projects.
3. Helps Tenants Meet Rent Demands
The primary objective of workforce housing is to provide low-income workers with the feasibility of using thirty percent of their income for rent. This attracts many workers (who can’t afford to live in expensive towns) toward workforce housing projects.
As a result, both the investors and workers are benefited from workforce housing. That said, when you invest in workforce housing, you might not get a high ROI, but cash flow will be steady.
4. Helps You Expand Your Portfolio
Generally, when you start a workforce housing project, it’s most likely the only project in that area – which means less completion. This helps you receive multiple offers. Also, since the unit absorption is short and demand is high, you’re urged to invest in other workforce housing projects and expand your portfolio.
The Final Cut
It’s no secret that workforce housing has hit new heights in the past few years, and it is here to stay in the future. This urges many investors to invest in workforce housing projects for various reasons. Investing in workforce housing during a recession has a handful of benefits, from helping you expand your portfolio to allowing you to earn a stable income. If you’re looking to invest in workforce housing during a recession, look at the benefits Maxwell Drever has discussed in this article