‘Affordable’ not luring investors

By Patrick Anderson
PBN Staff Writer

Many Rhode Island communities have fought the state’s Low and Moderate Income Housing Act for limiting their ability to stop development projects. More

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HOUSING

‘Affordable’ not luring investors

By Patrick Anderson
PBN Staff Writer

Posted 4/22/13

Many Rhode Island communities have fought the state’s Low and Moderate Income Housing Act for limiting their ability to stop development projects.

But while the law has endured, the economy and shrinking government budgets have done more to minimize its impact than any repeal efforts. Even with the real estate market in recovery, new residential construction, including affordable housing, remains anemic in the Ocean State.

Last year, three developers sought streamlined permitting under the Low and Moderate Income Housing Act, the lowest number since the law took its current form, open to for-profit and nonprofit developers, in 2005.

Low home prices, especially compared with construction costs, are still choking off private investment, while public investments in affordable housing continue to fall because of state and federal budget cuts.

“We are still in that mode of not a lot of development happening,” said Chris Hannifan, executive director of Housing Networks Rhode Island, a coalition of nonprofit community-development corporations that build affordable housing. “Financing is still tough for development and the credit market is very tight.”

The slowdown has meant that despite many suburban communities softening to new affordable-housing construction, Rhode Island has not made any progress since 2005 on its goal of making 10 percent of all homes affordable.

Instead, the share of units classified as affordable fell from 8.26 percent in 2006, the height of the real estate bubble, to 8.25 in 2011, according to figures from quasi-public lender Rhode Island Housing.

That lack of new supply is reflected in the fact that, while the cost of buying a house has fallen, rents keep going up.

According to the National Low Income Housing Coalition’s Out of Reach report released last month, the average two-bedroom rent in Rhode Island climbed from $924 in 2011 to $945 last year.

In both years, Rhode Island housing costs ranked as the 17th most expensive in the country. Massachusetts and Connecticut last year traded places on the list, with Massachusetts going up to seventh most expensive and Connecticut falling to eighth.

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