Affordable Housing for Seniors

Seniors have been a growing part of the homeless population, and this will continue. A major reason is Social Security increases aren't keeping up with inflation and housing costs. Modern, alternative housing options are needed to deal with this.

The most common solution to date for affordable housing is development using LIHTCs. This system probably isn't the most efficient because it involves several players and is kind of complicated. These projects aren't the most effective for the growing number of needy seniors. Sometimes, they're kind of trophy projects, in that they have features which aren't necessary when it boils down to cost and survival. They may have excessive design (appearance) features, and features which are nice to have, but ultimately aren't necessary, such as washers and dryers, storage and community areas.

 

Affordable housing developments in Missoula 

What would be really helpful here, is if someone started a nonprofit that went around building minimalistic micro-apartments in certain areas. There are smaller towns (population 5,000-15,000) in states such as Alabama, Mississippi and Oklahoma where lots in the 1/4 to 1/3 acre size are cheap, from 5,000 to 10,000. Many of these towns have declining or stagnant populations. These states have mild climates, and are affordable. 

The nonprofit could have land use attorneys that push the plans and permits through, and work on zoning exceptions and variances, if that's an issue. Places like these usually aren't hard to build in. They have minimal bureaucracy, and would probably welcome the economic gains (including property taxes) and demographic.

These developments could be about 30-40 units (able to fit on a good sized residential lot), and two to three story so they can be wood framed. 200-250 square feet units would be ideal, with minimal features: a micro fridge, maybe just a microwave for cooking, no washing machines in the facility, basic everything. New construction is always a plus, and they can look nice without becoming cost prohibitive. 

Even a lot of the newer micro-apartments in cities have things that aren't necessities, such as laundry facilities, gyms and common areas. Also, they're for certain people, so there's location and transportation considerations. Here, cost would be the priority. The same designs could be used across multiple developments to save on costs.

These places could be built for people 55+ that receive SSI, SSDI or Social Security (not seriously handicapped), and have that as a requirement to stay. The types of towns mentioned above have basic necessities, and job opportunities wouldn't be an issue. Just someplace where someone can live, rather than be on the street, in a shelter or in a car. 

Loans for the projects could come from or through HUD. Rent could probably run 500-550 per unit. The places would pay for themselves. The nonprofit could make a cost estimate on a project, get the loan, buy the land, then build and rent. They would require only about one parking space for every 2 units, because most of them wouldn't have cars (or, some wouldn't be allowed to park on the property as a condition). It's easy to get around smaller towns.

The key would be having just one nonprofit handling numerous developments across multiple states, so economies of scale can apply. 

 

Lobbying and Revolving Door Politics

 

In 2021, Biden signed Executive Order 13989, which had several protections against harmful lobbying and revolving door practices. This was rescinded under the current administration. The order was a major step toward getting money out of politics.

Industries where a lack of regulation in this area can be detrimental include pharmaceuticals, defense, finance, healthcare, and real estate. People shouldn't want personal and financial ties interfering with economic efficiencies in these areas.

One example where excessive lobbying can be problematic is how the NAR is lobbying to increase exclusions on capital gains taxes on residential real estate. This results in more inflated home prices. Also, the more the price of housing is inflated, the more realtors make on sales commissions (given equal turnover).

The ways revolving door politics work are a member of congress (or staffer) or government employee may leave that position and end up with a lucrative corporate (including boards), consultant or lobbying position, and vice versa. This is widely considered to be a conflict of interest.

Spending on lobbying by organizations should be limited to 1,000,000. This would eliminate much of the unethical behavior and open up congress to receiving feedback and suggestions from smaller entities. With politics there's the votes, campaign spending and lobbying. Getting things away from spending on campaigns and lobbying, and toward individual votes would work better.

Private Equity and Affordable Housing

 

Private equity, as well as other institutional investors (to a lesser extent), don't actually own that much of the single family rental supply (estimates range from 3-4%). In some Sun Belt markets, estimates range from 10-20%.

A concerning issue is where private equity is buying up mobile home parks. This is a gross example of predatory investing. Recently, all institutional investors accounted for about 1/4 of all mobile home park purchases.

I guess the typical scenario is where investors buy up the properties, then raise the rents for the lots, maybe several times over a period of years, then sell the properties for a profit. Mobile homes are very expensive to relocate, so the owners don't really have options. 

About half of these are financed through government-backed programs. So, one way to remedy this would be to prohibit that. Or, just make it illegal for institutional investors to invest in this type of real estate.