Multifamily Affordability: H Without T Doesn’t Tell The Story
Commercial practitioners in the multifamily space have special challenges communicating benefit. Dense urban areas present so many different factors that go into valuation to tenants and prospective investors that finding and highlighting the most important ones becomes critical.
At this month’s NAR Workforce Housing Forums, an interesting presentation by Center For Neighborhood Technology’s Jacky Grimshaw discussed the notion of affordability in a new way. CNT’s work over the past ten years has invented defined and refined the science of location efficiency. Centers of commerce and employment have seen over decades the migration of population to surrounding suburbs. What has allowed this to happen has been one thing above all others: transportation. It then follows that the links between work and home are key drivers of value for multifamily housing.
To allow the creation of objective measurements of value driven by transportation proximity, CNT has developed the H+T Affordability Index. H+T defines housing affordability in a new way that includes transportation costs. What this tends to do is radically reduce a metro area’s claim to affordability, as the “T” in “H&T” counts the costs of commuting to jobs from the traditional suburban evirons of what most think of when the concept of “affordable housing” is raised.
Mapping this true affordability exposes a great number of interesting scenarios related to transportation, smart growth and sustainability. Under H+T, higher cap rate buildings situated near transportation corridors move toward affordable status. Land use gets a closer look as land zoned for industrial due to its being situated near rail stops has a distinctly different future under development that aims at affordability. The opportunities for re-scoring of government-sponsored enterprises only grows as the index becomes more widely adopted.
Will the H+T index become second nature to CIEs and MLSs? Will the efforts of technology partners to introduce greater accuracy in cost and market analysis gin wide adoption? For the answer, check back in a year to take a look at the results pages of the popular property websites. When Realtor.Org, RPR Commercial, CommercialSearch.com, CoStar and Zillow are factoring in transportation, then you know that truer costs and valuations are on the table.