In the National Housing Institute’s blog “Rooflines,” Alan Mallach, former director of housing and economic development for Trenton, NJ, encourages us to consider which tools are most effective in creating affordable housing. Sometimes, apartments and houses can be purchased and restricted to residents of certain income levels more cost-efficiently than building new affordable housing. Average existing homes in cities like Dallas and Phoenix (Mallach’s examples) can be bought for under $200,000 while building affordable housing can cost over $200,000 per unit.
Mallach doesn’t argue against new construction. In places like San Francisco, the market for existing homes is incredibly expensive. A per-unit construction cost of $300,000 or more is “still a good deal.” Mallach urges consideration of all affordable housing tools.
RSG maintains and analyzes a database of California’s affordable housing tax credit projects. The database for 4% projects shows that per-unit costs range from $85,000 to $782,000. Acquisition and rehabilitation may not be cheaper than new construction, depending on the specific market and the specific project.
RSG can analyze the market and project results to maximize the effects of affordable housing spending. If you wonder whether spending money on acquisition or new construction will provide the most benefit in your community, contact RSG today!
Written by Dima Galkin, an Associate at RSG