Pre-Construction Planning Especially Crucial on Affordable Projects

Rising construction costs are the biggest challenge for all developers, but for affordable developers, it can be a crippling one. In fact, the increased construction costs are one of an amalgam of reasons that the affordable housing supply is shrinking. However, there are solutions. Partnering with an established affordable builder is one of the essential ways that developers get costs under control, along with pre-construction planning to stay on schedule and work out potential cost-increasing issues before they happen.

“Affordable housing projects face several inherent challenges to completion, especially in California,” Richard Lara, president and CEO of RAAM Construction, tells GlobeSt.com. “Among these challenges are rising construction costs and scarcity of quality labor, which, while they don’t exclusively affect affordable development, these challenges do hit the affordable sector especially hard.”

Costs are the biggest concern for affordable developers because they can’t recouped through increased rents, according to Lara. “These developers are accountable to their investors, who expect a certain return on their investment,” he adds. “At the same time, with the ongoing labor shortage in California, workers can afford to be choosier about the projects they work on and are more likely to choose projects that pay better. Given the cost headwinds I just mentioned, budget-conscious affordable projects may not be on the top of that list.”