One of the perennial favorite holiday season movies is the classic post-World War II comedy, “It Happened on Fifth Avenue,” about a multimillionaire developer, who is the film’s “villain,” and a loosely-knit group of homeless people who become the heroes. The group includes young war veterans and their families, a college student with no real job prospects, and an elderly hobo. They band together around a creative solution to thwart the evil land baron and convert a former Army barracks into inexpensive family housing that could benefit them all. Were these guys prescient, or what?
Today, the affordable housing industry is looking at a new wave of low- to middle-income residents whose diverse backgrounds resemble the folks in this classic American movie. Millennials and baby boomers alike are expected to join those already in need of affordable housing — the low-income families, veterans and senior citizens. It will take collaboration and ingenuity to construct housing solutions that meet the varying degrees of need for each population, much like in the film’s fictional story line.
First, let’s examine how we got here. The population of cost-burdened Americans is increasing at an exponential rate, and the face of affordable housing is changing. Today, underemployed and strapped with debilitating debt, millennials (those ages 22 to 37) are renting at a greater number and for much longer periods than previous generations. At the same time, baby boomers (ages 54 to 74) are being forced to confront a troubling reality: struggle to age in place, or leave their homes and communities for a more manageable cost of living.
Here are some of the sobering statistics:
- Recent data show that the United States produced 7.3 million fewer homes than needed to keep up with demand and population growth.
- Because of the recent tax reform legislation, it is projected that 235,000 new units of affordable housing will be cut over the next 10 years, costing the country 260,000 jobs.
- Nowhere in the United States can a full-time U.S. worker earning federal minimum wage of $7.25 an hour afford to rent a modest two-bedroom apartment.
- According to University of Chicago research, about 1 in 10 young adults (ages 18 to 25) experience some form of homelessness in a year.
- Seventy percent of college students graduate with unpaid student loans.
- The median wage of 25- to 34-year-old Americans has been stagnant since the 1970s.
And here’s what each group is telling us:
- Based on our own research, many baby boomers are financially underprepared for retirement and are reckoning with a need for affordable housing that they did not forsee. Although affordability is their first requirement, they also look for quality-of-life amenities such as low maintenance, one-story or elevator-served housing, and accommodations near health care facilities and their families.
- Many millennials, including recent college grads, earn less income than they expected and are saddled with tuition debt. It should come as no surprise that they find themselves in need of affordable housing. Data show their ideal affordable housing includes proximity to public transportation, for convenient access to employers and grocery stores, as well as internet connectivity.
Because these relatively new cohorts and existing affordable-housing residents have a wide range of needs, how can the industry create housing that will meet them all in the coming years?
We are optimistic that much like the scrappy heroes of “Fifth Avenue” it can be done by a disparate group with common goals. In this case, a cross-industry collaborative is needed, involving partners from health care, institutional investment, public policy, urban design, government agencies and social service organizations to create a solution. Congress also will have to address affordable housing funding needs since the private sector cannot do it alone.
We are seeing examples of health care companies entering the housing space. Kaiser Permanente recently pledged $200 million toward affordable housing to aid those for whom medical insurance is out of reach. And tech giants Facebook and Google are planning workforce housing for many of their younger employees. Our own organization works to shape onsite resident services tailored to the needs of families and seniors.
With additional government resources, our industry will meet the challenges by leveraging our ability to acquire and preserve older properties, and utilize a wide range of funding sources to create new homes for renters across the nation.
But if you want to know how they did it in the movie, I suggest you check it out on Netflix.
Richard F. Burns is president, CEO and trustee of the nonprofit affordable housing organization, The NHP Foundation, with offices in New York, Washington and Chicago. He has more than 40 years of experience as a real estate investment professional.