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Originally Posted by ardecila
The longer version of the story is that CHA's directive, since the time they tore down the highrises, is to build mixed-income developments. This means partnering up with private developers to fund and construct each project.
However, as you know, private developers compete for capital... and with the housing market being so hot, why would investors choose to sign on to a dicey mixed-income development when there's countless juicy market-rate projects to sink their money into?
CHA also wanted the market-rate portion of these developments to be for-sale units... the thought, right or wrong, was that having homeowners in the community instead of 100% renters will lead to better outcomes. But of course, the for-sale market is anemic and has been for over a decade. Millennials aren't as interested in buying a home, and the ones that are interested are often unable to qualify. The limited demand that IS out there is, again, drawn to market-rate developments and not CHA mixed-income communities where there's not much hope of appreciation over time.
CHA has the cash to rebuild 100% public housing, but they're reluctant to do that because the public consensus is still in favor of mixed-income even if such developments are now all but impossible to get off the ground.
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What was the track record I wonder in terms of the market component of the earlier 00s/pre-recession mixed income CHA developments (I suppose mostly concentrated in the former Cabrini area)? Has the CHA been resistant to tinkering with the for-sale percentages of its model new mixed-income developments/adding larger market for-rent components? There should have been some flexibility built-in for a variety of market changes. We'll likely be in the next market downturn (which will undoubtedly differ in ways from the last) - or nearing it - by the time the next projects are finally underway.
More broadly, my view on the relatively anemic for-sale new construction market is that it is actually more of (or at least, in roughly equal parts) a supply issue as opposed to a fundamental underlying demand issue. There's no question that millennial lifestyle preferences are a component on the demand side...not arguing against that fyi.....but I do think there is existing for-sale demand that is not currently being met on the new supply side.