Maya Saraf

Affordable housing is disappearing, but as the cycle continues to mature and a recession looms in the future, investors could revive the market. A recent report from UCLA Anderson Forecast took a close look at naturally occurring affordable housing, and found that capital is showing increasing interest in workforce housing as the probability of a recession increases. If a recession strikes in the next two years, it could revive the market.

"That seems likely, especially if there is a market correction or downturn over the next year or two," Maya Saraf, UCLA Anderson School of Management MBA 2019 alumna, tells GlobeSt.com. "A lot of current research points to a softening in demand for class-A properties, with a corresponding strengthening in demand for class-B and C properties. Moreover, if there is a recession, there will likely be even greater demand for affordable units, particularly from workers who lose their jobs or suffer pay cuts."

That supply demand dynamic is actually reviving the market before a recession strikes. The investment fundamentals are fueling interest. "Due to strong demand and low vacancy rates, workforce and affordable housing produce stable cash flows and are therefore relatively low-risk as compared to luxury housing that could perform quite poorly if there is a recession," Saraf says. "Capital seeking "safe" investments in the event of a downturn will be attracted to this asset class and has the potential to revive this segment."