Affordable Housing Market Entry
Real estate developers face increasing pressure to invest in the Bay Area affordable housing market. The greatest opportunity for investments is in the East Bay and Oakland areas. Consequently, a need to help low-income families has led large tech companies like Google to invest $50 million to build low-income homes around the area. Apple has also committed $2.5 billion in affordable housing investment funds to increase development and restoration opportunities. These are just a few of the large companies working in their communities through investments in the Housing Trust Silicon Valley’s TECH Fund to help families in need. The market is set for slower growth, as the changing economic environment from the corona virus causes speculation about development opportunities.
- The California Tax Credit Allocation Committee oversees affordable housing tax credit programs for private investment companies.
- California Debt Limit Allocation Committee manages the tax-exempt bond programs for affordable housing development.
- San Francisco's Housing and Community Development office manages for finance housing development and rehabilitation.
- Multi-family loan programs include affordable housing funds and short-term loan opportunities.
- The Low Income Investment Fund provides development, acquisition, construction, and term financing for affordable housing developers through the Revolving Loan Fund.
- The Partnership for the Bay’s Future offers fund products to investors in affordable housing development.
- Local Initiatives Support Corporation lends funds based on product type: development, acquisition, construction, mini-permanent, permanent, bridge, and working capital loans.
- The Rogers Family Foundation has compiled a list of Bay Area funding agencies.
- The Bay Area Transit-Oriented Affordable Housing Fund launched a $40 million funding program to promote local development.
Real Estate Investors
- The Satellite Affordable Housing Associates provide quality affordable homes and services.
- Eden Housing oversees affordable housing development and property management activities.
- Legacy Partners group owns, develops, and manages multi-family communities.
- The Lara mar Group is a billion-dollar real estate investment company.
- The Partners Group is a full-service development company in commercial and residential buildings.
- ACRE Investment Company focuses on commercial and residential real estate opportunities.
East Bay and Oakland Real Estate Markets
- Economists forecast a cooling period for housing prices, with lower inventory and strong buying competition.
- Experts believe the average annual 30-year fixed mortgage rate of 3.8% will last through 2020.
- Most of the Bay Area will see home prices will remain steady over the remaining months in 2020.
- The Bay Association of Realtor's statistics shows there were 20% fewer homes sold in Oakland.
- There is a slower construction pace for single-family homes because of the pandemic.
- Affordable housing options like Accessory Dwelling Units add more value to low-income families.
- The state of California is enacting restrictive rent and eviction control provisions to manage housing costs.
- Real estate developers believe the Bay Area will get past the corona virus better than most of the country.
- The Millennial age group is starting to search for first-time buyer homes.
- Much of Oakland’s new construction is centered near convenient downtown areas.
- The Bay Area lost 2,128 subsidized, rent-restricted apartments over 20 years.
- Affordable housing provides low-income families with stability.
- There is a high degree of competitiveness for credits among large developers that forces states to award tax credits to smaller developers.
- States are currently seeing most marketing of rental housing projects are targeting eligible families for 100 percent of all units.
- Large technology companies are making their mark on the affordable housing industry by donating billions to low-income housing.
- Real estate experts around the Bay Area did not expect the pandemic economic freeze to cause stronger competition for housing.
- Experts believe the housing market conditions will deteriorate over the coming months as the economy moves past the pandemic shutdown.
- Market trends show banks will tighten lending standards during a wide economic slowdown.
- Bard Consulting offers strategic real estate counsel to investors.
- Gensler Consulting offers research and design strategies and analytical services for real estate investors.
- John Burns Real Estate Consulting specializes in real estate market research.
Steps for Market Entry
- The first step to entering a new market involves defining the potential market.
- Before entering the market, conduct an internal assessment to understand how to leverage core competencies.
- When entering a new market, developers must do market research to decide the best possible return on investment for the new market.
- Investors must decide which market to enter based on strategic fit and the company's ability to serve the market.
- It is critical to decide the level of investment required before entering a new market.
- Investors must develop strategies for how they will enter a new market.
- Companies must access market trends to be ready for unforeseeable challenges.
The research was conducted to understand the Bay Area Market to invest in affordable housing development. We searched relevant sources including those relevant to the city, state, and federal funding programs. The search included articles regarding opportunities zones, as well as information highlighting big tech companies that are donating to help families in need. There is also information from key sources about funding companies offering grant initiatives to real estate investors. Several sources include information about the effects of the pandemic on the local economy and future growth in the market.