A new fund focused on affordable housing projects across the country is joining a wave of firms looking to keep apartment rents cheap while making what they hope are sound investments.
More affordable housing projects, mostly apartments, are expected to lose government subsidies as the number of expiring contracts that often run for 30 years more than doubles in 2025 on developments completed after the Low-Income Housing Tax Credit launched in 1987. Investors and municipalities have scrambled to find solutions for renters who earn too much to qualify for traditional subsidized housing but not enough to afford market-rate units as costs rise.
Turner Impact Capital is the latest firm to launch a fund to make apartment acquisitions for many of those renters. The Santa Monica, California-based private equity firm hopes to raise $750 million in equity from investors as it plans to pour a total of $2.3 billion into the preservation and development of affordable apartments.
The average American renter is now paying roughly $275 more per month in rental costs — a 19% increase nationwide — since the pandemic, according to CoStar data. Analyses from Harvard University’s Joint Center for Housing Studies have shown that more than 22 million renter households in the United States are now cost burdened, or spending more than 30% of their incomes on rent, a record high that has begun to affect workers in professional occupations.
Apartment investor Waterford Property Co. told CoStar News rents have risen so much near its headquarters in Orange County in California that workers in typically middle-class jobs including teachers and first responders have had trouble affording market-rate rents.
But, according to housing industry analysts, middle-income renters have largely been ignored by developers who tend to either accept large subsidies and tax breaks for low-income tenants or rely on high-end, market-rate developments to make deals profitable.