Shekar Narasimhan is a man on a mission against one of the nation’s seemingly intractable problems — affordable housing. A national expert on the issue, Narasimhan is the managing partner of Beekman Advisors in McLean, Virginia, which provides consulting services in various real estate fields, including affordable housing.
Narasimhan defines the nation’s housing crisis in the following terms: About 20 million people in the U.S. are paying more than 50% of their monthly income for rent. This is unsustainable, he says. These working people are being forced to choose between an apartment and paying for transportation, health care, child care and — in extreme cases — food.
“It’s crazy that we are in this situation where we have no idea how those 20 million people are going to be able to afford to live,” Narasimhan says.
The problem of America’s rising costs of living is certainly not new. But in recent years, it has become ever more acute. In January of this year, the average U.S. apartment asking rent rose to a record $1,604. For a low-income family, this level of rent is forcing them out of the city. They must live farther away from where they work. And they are more likely to be sicker, hungrier and poorer.
You are going to have to do things that are pretty remarkable, things that have never been done before, to solve affordable-housing issues.
— Shekar Narasimhan, managing partner, Beekman Advisors
The real estate and mortgage industries know there is a crisis and are working to find solutions. The Mortgage Bankers Association (MBA), for one, is promoting affordable rental housing and minority homeownership with a variety of projects and initiatives. From a policy perspective, they are promoting the passage of the Biden administration’s Build Back Better legislation, which would expand access to federal subsidies that will enable the construction and rehabilitation of an estimated 1 million affordable rental-housing units along with another 500,000 homes for low- and middle-income homebuyers.
Katelynn Harris Walker, the MBA’s associate director for affordable-housing initiatives, says that her organization also is looking at ways to reduce the time to complete an affordable-housing project by streamlining the “soft” or gap financing, such as grants and subsidies. Currently, it can take five to 10 years to finalize the funding for these projects.
“One of the things we have been advocating strongly for is strengthening the low-income housing tax credit program, which is the No. 1 tool for expanding affordable multifamily housing in the United States,” Walker says.
While Narasimhan agrees that these policies are needed, he also believes that this problem is so large, the industries will have to start thinking differently to find answers. “You are going to have to do things that are pretty remarkable, things that have never been done before, to solve affordable-housing issues,” he says. “You are going to have to think outside the box.”
For Narasimhan, outside-the-box thinking includes innovations in the construction of houses and apartment buildings. He advocates for new technology that can build structures in ways that take a fraction of the time that is currently required. For instance, construction-scale 3D printing could be used to build the walls of a home with a concrete mixture while traditional construction is used for the foundation, roof, windows, wiring, plumbing and finishes. This technology is still new, but it has promise and may be able to build structures more cheaply and in a fraction of the time.
Another idea is to use prefabricated modular housing units. These techniques have been around for years but has yet to really catch on in the U.S. In China, however, this form of construction has resulted in a building revolution, where 10-story apartment complexes can be completed in less than two days.
Certainly, these types of construction may not be quite ready for primetime yet. MBA’s Walker says such construction methods are fascinating innovations and need to be studied, but she doesn’t know if building prefabricated apartment complexes would gain approval from the safety and regulatory bodies that oversee construction projects at the state and local levels.
Narasimhan says that city zoning laws also have to be changed to lower barriers for affordable-housing projects. He wants more cities to follow the lead of Minneapolis, which in 2018 eliminated single-family zoning and opened up neighborhoods to allow homes of up to three units to be built on any residential lot.
This type of change is controversial, with many residents opposed to higher density and homeowners worrying that such a plan will lower their property’s value. Despite the fact that many reports have shown that these zoning changes won’t lower home values, Narasimhan recognizes that these plans irk the not-in-my-backyard crowd.
“You have people who will always be against increased density,” Narasimhan says. “Even if the project doesn’t look, smell or feel like affordable housing, it doesn’t matter.” ●
