As part of the ACLI’s latest webinar, IMPACT Community Capital’s CIO outlined how affordable housing plays a foundational role to create Sustainable Cities and Communities.
Creating and preserving affordable housing gets to the heart of one of the United Nation’s most ambitious sustainable development goals – SDG 11, Sustainable Cities and Communities. The lack of affordable housing disproportionately affects disenfranchised communities, as high rents drain income for basic needs like childcare and food.
IMPACT’s recent webinar in partnership with the ACLI, “Investment and Impact Opportunities in Affordable Housing,” highlighted how institutional capital is critical to make a dent in this area. IMPACT’s Michael Lohmeier was joined on the panel by Pamela West, Managing Director & Portfolio Manager, Impact Investing at Nuveen Real Estate.
As part of the conversation, Lohmeier noted that for many families, an affordable unit, “is like winning a lottery” because rent savings can be over $1,000 per month, making a significant impact on family finances. This speaks not only to the impact on communities, but also the stability of the asset class as tenants generally value their housing security above all other expenses. Other highlights include:
While not always obvious on the surface, there is an alignment of interest between affordable housing and environmental sustainability. As Nuveen’s Pamela West outlined, cost savings available through energy efficiency represents another lever to enhance affordability for tenants. Increasingly, these environmental factors are playing a bigger role in underwriting.
Affordability’s Direct Links to DEI and Inclusivity
Communities of color tend to be disproportionately affected by rising rents and the pandemic has only exacerbated housing instability amid enduring racial income disparities. The cost savings available through affordable housing, as the webinar discussion highlighted, can be channeled directly into other essential needs, such as healthcare or childcare.
A Safety Net for Vulnerable Populations
Affordable housing for the formerly homeless, including those with mental health issues or substance abuse problems and seniors with special needs, not only makes an impact, it also is embraced by numerous stakeholders in the public and private spheres who want to make sure it succeeds as an investment, said Lohmeier.
Preserving Sustainability; Driving Resiliency
Sustainability implies that solutions aren’t temporary in nature. While new affordable housing developments are critical to solve the 7 million unit shortage of affordable rental housing in the U.S., keeping the existing supply intact is crucial, said Lohmeier. Over the next decade, over 700,000 units could see their affordability status expire— and that’s why programs like IMPACT’s Mortgage Opportunities Fund are critical to help maintain affordable housing.
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