New vs. Old Stock: Affordable Housing Preservation

One of the most challenging issues that leaders are working on today is the affordable housing crisis. We have seen jurisdictions like Fairfax County declare that they want to construct thousands of new affordable units within the next 10-15 years. If you wonder why we are in the situation we are in as a country, there are multiple factors at play. The growing wage gap and collapse of the middle class in recent decades, skyrocketing land and construction costs for homes, and the 2008 and COVID-19 recessions all contributed to today’s difficult market. The New York Times highlighted how the collapse of the housing market in 2008 drastically impacted our lending and building practices, causing builders to slow down construction due to fiscal concerns. According to a JLARC study, Virginia alone has a statewide shortage of at least 200,000 affordable units for low-income households as median home sales prices have jumped by roughly 30 percent within the last few years [Fairfax has the highest rate of unmet need in the state]. This is likely to be of greater concern as many of our older units under the low-income housing tax credit (LIHTC) program are set to expire within the next few years – opening them to substantial rate increases upon expiration. So, in summary, it is a complex subject that does not have a one-stop solution. There are multiple steps that need to be taken, including increased emphasis on preservation.

My partner and I reside in one of the oldest affordable housing communities in the City of Fairfax. There have been multiple reports regarding pest control problems, stormwater and flooding concerns, and appliance issues. This has taken a central role in my campaign as we need to fix up the affordable housing stock that exists in addition to developing new ones. We can avoid the displacement of residents by not tearing down these older units and, instead, incentivizing property managers to update our current stock through potential abatement programs and an expedited permitting process. The fiscal benefits are clear as newer units can be built upwards of $700,000 per apartment home compared to renovating them at around one-third of the cost on a faster timeline. The US Department of Housing and Urban Development (HUD) also recognizes the importance of preservation – recently announcing $469 million in new funding for this goal. This includes options for climate resilient housing and hazard reduction.

However, there are challenges to these housing rehabilitation projects. Variations in policies fragment these opportunities and discourage owners from going through the process to do it, especially with expiring subsidies as mentioned earlier. Without some kind of expedited process or funding stream, property owners may be limited in what they can do from a budgeting standpoint. While the costs of new housing are not as high as renovating older stock, it is still a financial burden. Strengthening code enforcement can only do so much if additional funding tools are not available. In 2003, the total national rehabilitation investment needed was estimated at $1.3 trillion, so we can imagine it is higher today. 

The good news is that tax programs and government investments can close the affordability gap, so we need to increase the supply of these opportunities. Fairfax County decided to look at this in 2021 through their report from the Affordable Housing Preservation Task Force. This includes ideas like gap financing, predevelopment funds, a preservation warning system, and using reserve funding to meet these goals. In the City of Fairfax’s housing assessment report, they touch on renovations and how we have lost affordable housing units at a higher rate than we have gained. Local policies are crucial to getting preservation efforts started and in complementing federal grants as well to mitigate these trends. 

Preservation is key and a renovation fund can go a long way. I am calling on us to make this more of a focal point when discussing the housing crisis.