On my block, a 17-story high-rise went up that’s giving my neighbors and me serious cases of apartment envy: Longview boasts every luxury you’d see in a White Lotus–level hotel (24/7 concierge service, billiards room, golf/sports simulator, outdoor yoga terrace, Peloton studio, pet spa) then tops it off with a landscaped roof deck with fire pits, wet bar, and even a dog run so Fido can poop on the roof and stretch his legs while you sip a martini and admire the Manhattan skyline.
Most enviable of all, though, is that certain units at Longview rent for just $874 per month, even though other units in the building go for over $7,000.
This obscenely low rent is possible because Longview incorporates affordable housing, proving just how far these once-humble developments have come. Far from being run-down “projects,” these government-subsidized units mingle seamlessly with neighboring market-rate apartments and are indistinguishable, except for the price.
The people who qualify for these units may surprise you, too. Within Longview’s 197 apartments, the 50 “affordable” units went to tenants earning 130% of the area’s median income, ranging from $35,589 up to $150,930 per year.
In other words, living at the poverty level isn’t required. You could simply be an average American who could use a little help putting a roof over your head.
Who doesn’t need affordable housing?
With housing affordability near crisis levels nationwide, demand for government-subsidized homes has soared. Housing lotteries are mobbed with applicants, lengthening wait times by 42% from 2009 to 2023, according to the US Department of Housing and Urban Development. Applicants spend over two years on average waiting (and praying) for one of these coveted deals.
“People who never considered affordable housing before are now competing for units because market rents became impossible,” says Los Angeles real estate agent Wesley Kang at 1099Cafe. “Application numbers went through the roof during the pandemic and never came back down. One affordable project in Santa Monica got 12,000 applications for 85 units last year, compared to 4,000 applications for similar projects in 2019.”
Kang once worked with a client for three years to land a unit. “He was looking to buy a condo in Los Angeles with his $85,000 salary but got priced out of everything despite having $40,000 saved,” he recalls. “I helped him apply to 15 different affordable housing lotteries.”
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Eventually, their hard work paid off. “His unit in West L.A. costs him $1,800 monthly, while identical apartments in his building rent for $4,200 to market-rate tenants,” Kang says. “The complex looks exactly like luxury market-rate housing with modern finishes, rooftop deck, and gym facilities. Developers figured out that attractive design costs almost the same as ugly buildings, so you’d never guess it was affordable housing without seeing the income requirements.”
Is affordable housing a good investment?
The good news is that certain states are stepping up and building more affordable housing, with Delaware, New Jersey, and West Virginia leading the way. Legislation working its way through Congress, like the Neighborhood Homes Investment Act, aims to add and preserve more than 500,000 affordable homes across the country over the next 10 years.
In uncertain economic times such as these, savvy real estate investors have also taken a renewed interest in affordable housing.
“Rental units that cost below-market become even more coveted in a recession,” explains Brian Davis at SparkRental. “Last year, our co-investing club invested in a multifamily property where the new operator partnered with the local municipality to set aside 50% of the units for affordable housing, in exchange for a 50% abatement on property taxes. Sure, they took a small hit on gross revenue, but they more than made up for it with savings on property taxes. Meanwhile, they have a waiting list for those units. They’ll keep renting those out with 100% occupancy and no loss in rents or concessions.”
Landlords can also join the Federal Housing Choice Voucher program, which currently houses 2.3 million low-income tenants nationwide whose rent is subsidized by Section 8 vouchers. Despite what many think, landlords who do this collect the same rent that they would with market-rate apartments; the Public Housing Agency pays what tenants can’t cover (here’s a more comprehensive list of affordable housing myths that aren’t true).
Affordable housing real estate investment trusts (REITs) are yet another easy way to invest in affordable housing without the hassles of owning an entire rental property. And, in addition to being recession-friendly investments, you can take heart in knowing you’re playing a small part in making housing a little bit more affordable for everyone.
See more photos of Longview below.
