Housing Hits Dire Point for Low-Income Households in Bay Area

SAN FRANCISCO—Finding a home in the right neighborhood at the right price can be stressful for many buyers, but it’s become a dire struggle for low-income households in the Bay Area. This is because affordable housing construction in the nine-county area hasn’t kept pace with tech-fueled business and population growth.

In Oakland alone, the homeless population increased by 47% from 2017 to 2019. And there are nearly 130,000 homeless people across California, comprising 24% of the US homeless population.

James Vossoughi, vice president, community development banking with Chase, recently shared some insights on how COVID has had an impact on affordable housing, resulted in shifting strategies and provided opportunities for growth.

GlobeSt.com: How has the pandemic impacted the local affordable housing landscape?

Vossoughi: The need for safe, stable affordable housing has long been an issue. The pandemic has heightened the inequality in the housing market and exacerbated the need, highlighting both a growing lack of supply and increasing tenant base not only for low-income households but for a larger portion of the workforce as well. You simply cannot shelter at home when you have no place to call home.

GlobeSt.com: Has the pandemic shifted your strategy on the lending front and what new initiatives/opportunities are you focused on at Chase?

Vossoughi: The industry has had to get more creative with financing affordable housing developments, also requiring developers to think of new ways to get projects over the finish line. We are unequivocally committed to supporting our clients, standing by them when there are still many unanswered questions on the long-term impacts of the current economy. We’ve made a renewed effort to support permanent supportive housing and all developments with operating subsidies. We’ve also found ways to mitigate risks for projects in weaker markets with some market risk such as workforce housing and units with a low discount to market in the current environment so we can keep supporting developments that are needed in the long term. We’re always looking for ways to work with our clients and help bring these important projects to local communities, making a positive impact where we live and work.

GlobeSt.com: How important are partnerships with local stakeholders to solving this crisis? Where do you see other opportunities for growth?

Vossoughi: Creating and preserving affordable housing isn’t something that can be done by any one group. As the saying goes, it really does take a village and all stakeholders at the state, city, federal, business and nonprofit levels have to be fully invested in creating policies and finding new and innovative solutions that contribute to solving the overwhelming housing crisis. Not every project is going to be straightforward especially during times like this, and we all need to be creative in finding ways to make those tough projects work. As an example, in San Francisco we worked through a tough reversion clause with the federal government in order to close financing on what will be San Francisco’s largest supportive housing project for formerly homeless people. We’ve also seen more modular projects come to fruition and more modular factories opening up. The upfront payments and risks that are associated with these types of projects can be challenging but innovative housing like this, with the intent of building homes faster and cheaper, is essential to meet the increasing demand and we’re committed to supporting innovative efforts.

GlobeSt.com: How can Bay Area developers and other industry players prepare for the coming year? What’s needed to get a deal done in this new normal?

Vossoughi: The underwriting box has tightened with no one knowing what the future landscape might look like. As an example, expecting rents to continue to climb year-over-year is just not a realistic assumption right now and stress testing assumptions is a good strategy. Developers should be conservative by maximizing cushion wherever they can in order to plan for every type of scenario in the coming year. Financing partners will expect to see that. Projects with fewer credit exceptions are going to attract more financing options. To help get your projects’ financing needs met, talk to your financing partners as early and as often as possible along the way and be up front about issues so they can work hand-in-hand with you through them. Work with reliable partners who have a history of executing during challenging times.