Our members were asked to provide their insight and expertise on emerging trends for the upcoming new year in the affordable housing industry. They shared their knowledge on the topics of the impacts of the aging population, advances in construction, the advantages of technology and what they see as the biggest trends for 2020.
They were asked: Look into your crystal ball, what will be the biggest trend in the affordable housing industry for 2020?
Recognizing that other respondents may address trends similar to what we foresee, we wish to underscore what we believe will be two of the biggest challenges faced by the industry in 2020: 1. Staffing of sites and 2. Continued issues generated by the Department of Housing and Urban Development (HUD)’s new Real Estate Assessment Center (REAC) rule.
1. Staffing of Sites. Greater attention must be allocated to finding and retaining qualified site-based personnel. With the national unemployment rate at 3.5% (the lowest since 1969), property management firms encounter even greater challenges than usual, especially in the face of competing job offers for work at roughly the same rates of pay but in entirely different industries. With state-mandated minimum wage requirements approaching $13-$14 per hour in some jurisdictions, a reasonable applicant might very well be inclined to accept a comparably paying entry-level service industry position (e.g., fast food) as opposed to that of an on-site rental manager assistant, especially in the absence of the burden of responsibility for a multimillion-dollar asset, resident challenges and a never-ending stream of compliance/regulatory inspections, audits, deadlines, etc. With many of the governing agencies closely monitoring (and in some cases, approving) annual site operating budgets, the opportunity to enhance site personnel salaries comes infrequently and/or, in instances, such enhancements—beyond bare minimums—are categorically rejected.
2. HUD’s 14-Day Notice REAC Inspection Rule (Feb. 20, 2019) will, of necessity, trigger revisions to participants’ philosophies, published policies and procedures in, at minimum, the following areas:
a) Quality control and work order policies and procedures
b) Frequency and extent of internal inspections
c) Reallocation of attention and resources from “exterior” to “unit interior” aspects of a community
d) Staffing/personnel needs, including not only provisions for vacations and other absences, but also continuing education and training
e) Lead hazards, mold, asbestos, radon and other environmental factors remediation
f) Supplies/parts kept in stock
These changes arise not so much from a sense of panic to the changed protocols, per se, but rather as adjustments to the coordination of staff and other resources within now further constricted time frames.
As we look ahead, there are three major affordable housing trends to consider: first, embracing technology; second, creating a comprehensive service-enriched model for the aging population; and third, producing specialized niche housing for veterans and emancipated minors.
Technology: Like it or not—technology has become a driving force in our daily lives. From our transportation, the way we communicate, and our smart homes—it should come as no surprise that our residents are keeping pace with emerging technologies and integrating technology into their lifestyles. As property managers, we need to both embrace and stay on top of tech trends in order to deliver resident services in a more convenient, interesting, instantaneous and tech-savvy format. Residents want digital platforms to keep themselves connected and engaged within their communities—and we will need to deliver.
Aging Population: We all know the aging population is driven by the baby boomers. And, we’ve seen over time, as this generation has moved into various “life stages” they have brought to light a variety of challenges and opportunities for the multifamily industry.
Now, this means supporting and encouraging an engaged retirement lifestyle though a robust service-enriched model. It’s not just providing quality homes anymore—it’s the coordination of wellness, educational, cultural and other enrichment programs to enhance the overall quality of life. The added benefit? These services not only promote aging in place but also serve to create healthier, longer and more successful tenancies for our older residents.
Niche Housing: The motivation behind “niche” housing is largely a need-based one. And, with high rates of homelessness and housing instability widespread within both the veteran and emancipated minor populations, the affordable housing industry needs to focus on the production, support and enhancement of housing models that position residents within these groups to overcome the many barriers that prevent them from obtaining and maintaining stabilized housing.
Furthermore, in addition to housing production, we need to advocate on their behalf—and to develop well-funded, research-based, impactful programs. And, understandably—while housing insecurity is not a trend we want, it is without doubt, one of the areas where we can have the greatest impact.
PRD Management Inc.
Karin McGrath Dunn, president
The effects of the “generational shift” taking place in today’s workforce will continue to impact our industry along with many others. With each retirement, each sell off, each passing, we lose knowledge, relationships, history and that important commitment to quality affordable housing.
Successors, even when they exist, are often not prepared and not as experienced. Some successors find they don’t have the same access, support or “benefit of the doubt” that retirees (who spent decades in the business) have enjoyed. As more of our deeply experienced agency colleagues, owners, peers and long-term employees retire, sell or “phase out” of the business, there will be tremendous strain placed on our industry and our organizations.
So, what can we do?
We need to find new ways to record and transfer experience that has been gained over decades and help our future leaders to build key relationships and knowledge. We need to actively engage with the new people and companies coming into our industry and help them create strong connections and a deep commitment to quality affordable housing. We need to attract and grow talent and provide the next generation with opportunities to learn and lead on the job all along their career. We need to do all of this well before a more experienced leader fully retires or opts out of the industry.
We also need to acknowledge that we have many “wise elder”’ in our industry who will want to make contributions in their post-retirement phase. Let’s invite them to stay engaged and active as industry coaches, mentors and champions to:
*Push important issues and agendas forward
*Transition key relationships and lend influence
*Support and inspire our industry and future next generations
Addressing this trend of generational change and creating a sustainable future for our industry is a job for all of us—the newly minted industry leader, those who are mid-level, those who helped to shape the industry, and, of course, associations like NAHMA, which bring us together in the shared purpose of ensuring quality affordable housing.
I am seeing many properties coming toward the end of their original life and are needing major improvements and/or renovations. This has created additional multiple financing/program layering events in order to secure the resources to complete the work. Obviously, this is a positive for both residents and property owners; preserving a property by repositioning it for another 15- to 25-year life. The multifamily management challenge is monitoring the layers of compliance and regulatory oversight. Management companies are then putting pressure on the software providers to enhance products to recognize and track these additional elements, so it’s really a far reaching cycle.
In the Midwest, we are seeing properties exit both the HUD and Low-Income Housing Tax Credit (LIHTC) programs after fulfilling their original term obligations. Often this happens after an acquisition or simply an owner choosing to opt out and take a property to market rate. These shifts, in conjunction, with the already large need for affordable housing is limiting the supply of units that will accept a local (tenant) based voucher and/or that are truly affordable to middle- or low-income households. With the costs of development and construction where they are, we are not seeing new units come online in the same rental price points so the moderate- and low-rent unit supply is decreasing.
A few property amenity focus areas include:
The addition of package delivery solutions, whether to a common location or creating a delivery system to individual units.
More technology access; specifically bigger, better, faster internet or Wi-Fi for all property types.
In looking forward into 2020 technology advancements are set to have a tremendous impact on affordable housing, as well as all types of residential property.
For affordable housing, HUD has been looking to hop on the paperless office bandwagon for a few years. HUD implemented the e-tool for Capital Needs Assessments (CNAs), making the use mandatory for Federal Housing Administration (FHA) applications and insured properties, as well as uninsured 202/811 Project Rental Assistance Contracts (PRACs) in 2017. While this system is currently undergoing an update and is unavailable until spring 2020, this was a first step towards paperless transactions with HUD.
The draft Multifamily Housing Notice Electronic Signature, Transmission, and Storage—Guidance for Multifamily Assisted Housing Industry Partners was posted a few months ago for public comment. While the comments are still being reviewed, this guidance further demonstrates HUD recognizing the paperless office movement that has been taking place the last few years. This guidance would supplement the current system of submitting information and requests (such as rent increases or reserve withdrawals) to HUD electronically.
While the technology of the paperless office may be welcomed by the affordable housing industry there are other technologies that may not be viewed as positively—that being augmented reality or AR.
For those unfamiliar, augmented reality is the blending of digital images or elements into real world environments (Pokémon Go). There are several applications for AR that can impact on any type of residential housing.
With the advancement of 5G, which will greatly enhance mobile connections, making them faster and more stable, applications and uses of AR are anticipated to become more common. These applications can include advertising overlays on buildings that are only visible to users of an app on their phone. Imagine this scenario: as part of the listing for a property there is an AR ad created and placed on various properties surrounding the listing property (i.e., the competition)—maybe your property. A potential renter, when using the apartment finder app, sees this ad for the competition on your property—without your being aware it is there!
The advertising use of AR is in addition to the concerns from AR games, at least 10 others in addition to Pokémon Go, since these take players on to private property, where liability becomes an issue.
The advancements in technology will continue into the future, but 2020 may see a giant leap forward that impacts our industry for better or worse.
Looking into my crystal ball and seeing a trend that will be impacting the affordable housing industry in 2020 and forward is the lack of affordable housing being constructed that just focuses on families and seniors that are not homeless or have special needs. Every community that we manage that has been constructed in 2019 or scheduled to open in 2020 has some special need component tied to it. This is mostly due to the large amount of media attention that is being brought up regarding the homeless and other residents with special needs. Unfortunately, the poor working class is now going ignored in regards to affordable housing. Many counties and states have increased minimum wages to try and combat this issue, but employees at those wages still cannot afford to live near where their job is located. To compound this, most recent labor reports show that jobs are being created much faster at the lower wage level than ever before.
My suggestion is that additional funding be made available for the special needs as well as providing the current funding levels for all other affordable housing. California is facing the largest housing crisis in its history and even though there is money being set aside for affordable housing it is specifically for special needs. The housing crisis is a supply issue, so the only solution is to provide more housing, especially that is affordable to every qualified resident not just those that are currently being highlighted in the media.