While COVID-19 continues to negatively impact many areas of commercial real estate, affordable housing appears to be largely unaffected by the pandemic, according to a new report.
In the second quarter of this year, the national vacancy rate in the affordable housing sector fell by 10 basis points to 2.4%, according to a new report from REIS subsidiary of Moody & # 39; s Analytics. In addition, the sector saw inventory growth of 0.5%.
The number of completions of around 5,700 units was below the quarterly average of almost 7,900 units last year– –That was the lowest since the third quarter of 2016, according to the report by economist Mary Le.
"It's important to note that a lack of affordable housing was a major pre-pandemic problem. Hence, the constant imbalance between supply and demand in this sector is compounding the critical need for affordable housing across the country, ”Le wrote. "Accordingly, this sector seems largely unaffected by COVID-19."
The results are in line with a duo of reports released at the start of the pandemic that point to the history of affordable housing that has weathered recessions largely unscathed.
When examining more than 1,000,000 individual objects Novogradac noted that the national occupancy rates For LIHTC two-bedroom properties for residents with or below 60% of the median area income, the median income never fell below 95% from 2009 to 2019. In addition, there has been a gradual increase over the decade, according to the national accounting and advisory firm.
Novogradac's data is corroborated by historical data from the national non-profit affordable housing association Enterprise, which also shows an increase in mean total sales per unit for each year from 2005 onwards.
But affordable housing Rental collections appear problematic. As of August, it was 77% of the 2019 collections and 76% of the July 2019 collections, according to proptech company MRI Software. And overall rental income is falling, the National Multifamily Housing Council's latest Rent Payment Tracker reported.
Some problems were even identified in the REIS report. “Some metros are more affected than others. Odessa-Midland and Fort Myers recorded the largest drop in rents with -3.2% and -1.9%, respectively, San Francisco and Fairfield Counties with -1.2% each. "
Overall, however, Le claimed: "Affordable living space is arguably the strongest and most durable of all property types. As demand regularly exceeds supply, this sector will remain robust. It is expected to remain stable during the pandemic and improve fairly quickly as we recover. "