Top headlines
Lead story
Across the country, affordable rental homes for low-income Americans are often more costly to build than those that are rented at a market rate. That happens, in part, because the financial tools that were designed to make these housing units more affordable – like tax credits and federal grants – also end up taking time and resources.
The rents that are feasible for low-income people don’t cover the construction costs. To make up the difference, affordable housing developers often turn to public funds.
But “assembling this financing takes lawyers, accountants, consultants and staff time – the so-called soft costs that sit on top of the hard costs, such as concrete, steel and labor,” writes Solomon Greene, director of the Center for Housing Research and Innovative Solutions at the University of Denver.
In Colorado, state policies have made building affordable housing more accessible in a few ways, like lowering the price of land and creating shared applications that lower some of the soft costs tied to financing.
“Affordable housing will always require some subsidies,” Greene adds. “But those costs are not fixed.” Like many other states, Colorado faces a shortage of affordable housing units, so lowering the cost to build is critical to closing that gap.
[ Sign up for our weekly Global Economy & Business newsletter, with expert perspectives from around the world. ]
