The Austin skyline has become home to dozens of construction cranes building luxury high-rises, but are all these luxury apartments what the city needs?
Workforce housing (or affordable housing) in the city of Austin describes units where rent is approximately $700 – 1,300. Thrive, FP’s primary investment acquisitions for the Multifamily Equity Investment Program have been with workforce apartment properties, delivering great returns for investors on their real estate investments for the past 10 years.
This is the kind of housing that Austin desperately needs, but it’s not the type of housing that developers are currently building due to the high cost of landing and construction. The push for luxury housing is building an inequity in supply and demand between high-end luxury housing vs. affordable housing.
In the next 10 years, the US will need about 2 million affordable units to meet demand, but instead, about 200,000 affordable units were lost last year due to conversation and obsolescence. This is creating an unbalanced real estate environment and a long-term opportunity. As one major developer, Toby Bozzuto of The Bozzuto Group, stated in a recent article “There is an acute crisis headed our way”.
The head investment management team at Thrive, FP, with their keen insights into the current Texas market forecast are now holding their cards, waiting for material costs to drop and for workforce properties to become better balanced between risk and reward. Thrive, FP estimates that we are sitting on a 10-year sweet spot for affordable housing ownership for the companies who have the progressive vision to see and meet the needs of tomorrows residents. They see this will be a chance to pounce on the unmet demand for millions of affordable housing units. For now, JP Newman CEO, commented “We’re taking a step back, watching closely, so we’ll be ready to buy when the moment is right.”