Economical Housing by Design

Today’s apartment housing market has three parts: made affordable by subsidy, market rate at moderate rents, and upper middle/luxury. Only ten percent of new construction is aimed at market rate at moderate rents, while this is the biggest part, constituting 70% of the apartment housing market. On October 4th, the American Enterprise Institute (AEI) will be hosting its 1st Annual AEI Conference on Economical Housing by Design, which is sponsored by the National Multifamily Housing Council. Ed Pinto, Resident Fellow and Co-director of AEI’s International Center on Housing Risk, joins us to talk about the conference.

For those unfamiliar with AEI, it is a public policy think tank dedicated to defending human dignity, expanding human potential and building a freer and safer world.

Buzz: Ed, thanks for taking the time to speak with us.  I understand you’ve been with AEI for the last six years and you’re currently the Co-director of the International Center on Housing Risk. Could you tell our readers what this role entails?

Pinto: Thank you for the opportunity to reach out to Buzz readers.  The Center has two missions.  First, to create transparent and objective databases that inform on trends in the housing market.  For example, three years ago we introduced the National Mortgage Risk Index (NMRI), which stress tests every government agency backed loan and uses this information to create the monthly NMRI.  To date we have risk-rated 23 million Fannie, Freddie, FHA, VA, and Rural Housing loans.  On September 26 we will be introducing the National Mortgage Market Index (NMMI).  NMMI is the first index to report on the entire purchase loan market at national, state and metro area levels.  The NMMI will be published quarterly with a minimal time lag—September’s release covers over 13 million purchase loan originations from the fourth quarter of 2012 through the second quarter of 2016.

Second, the Center develops market-based solutions for housing finance informed by our research.  Many of your readers will be familiar with the Wealth building Home Loan.  The upcoming conference will report on our research about market rate apartments at moderate rents and our solution for increasing the supply of such units—the market-rate economical apartments by design.

Buzz: On October 4th, the First Annual AEI Conference on Economical Housing by Design will be held in Washington D.C. What are some of the goals associated with the creation of this conference?

Pinto: Back in March of this year we began to study the causes of the supply/demand imbalance for market-rate economical apartments by design and develop approaches for increasing the supply. We decided early-on to base our field research on successful development approaches being undertaken in the Sarasota, FL market (Sarasota and Manatee counties).  Having a conference to report on our research was a natural follow-on.

Buzz: Can you highlight some of the speakers involved and what they bring to the event?

Pinto: The research undertaken by the Center will be presented by Tom White, Charlie Wilkins, Kevin Corinth, and yours truly.  Tom, Charlie and I will present our paper entitled: Economical Rental Housing by Design for Communities that Work.   Kevin will present his paper entitled: The Role of Community in Economical Rental Housing by Design for Communities that Work.

A panel discussion will follow these presentations.

Tom is retired from Fannie Mae where he was senior vice president at Fannie Mae, responsible for all Fannie debt and equity investments for multifamily properties. He also was executive vice president of the National Council of State Housing Agencies; held senior positions at the U.S. Department for Housing and Urban Development, Bear Stearns and the Michigan State Housing Development Authority. Early in his career, he was a social worker, a community organizer for the city of Detroit and a state legislator representing downtown Detroit.

Charlie is a consultant who works with regulatory agencies, owners, managers and lenders regarding affordable housing policy, finance, asset management and property management. He has been an advisor to the U.S. Department for Housing and Urban Development, to the State of Louisiana’s hurricane recovery program, and to the U.S. Department of Agriculture’s Rural Housing Service. As a senior executive with the National Housing Partnership, he was responsible for asset management of NHP’s 60,000 units of affordable housing and its relationships with the Congress and HUD. He is a senior fellow in the School of Public Affairs at the University of Maryland, a past president of the National Affordable Housing Management Association and a board member of the National Center for Healthy Housing.

Kevin is a research fellow in economic policy studies at AEI, where he focuses on homelessness and the programs and policies put in place to assist the homeless. His research includes the causes of homelessness, designing performance-based incentives for homeless assistance programs, the effect of homeless migration on how cities provide services for the homeless, and policies to better reintegrate the homeless back into society.

Buzz: What topics will be discussed at the conference and what can attendees expect?

Pinto: As noted, the conference will report on our research about market rate apartments at moderate rents and detail our solution for increasing the supply of such units; what we call market-rate economical apartments by design.  These apartments constitute the great middle of the apartment market and largely provide housing for service workers, line production workers, and entry-level workers in other parts of the economy.   Service and line production workers’ salaries average about $26,000 per year (with surprisingly little variation across the country) and nationally account for 38 percent of all public and private jobs. Entry level workers in other parts of the economy have similar incomes.

Attendees will learn about the four choices communities have in meeting the rental needs of these workers, why economical rental housing by design is the best way to meet this demand, and that success requires a two-way bending of the cost curve–cost-effective land use regulations and the utilization of economical design, construction, and management techniques.

Buzz: Who is the target audience for this conference and how can people sign up to attend?

Pinto: Developers, appraisers, real estate agents, academics, government officials, policy advocates and anyone interested in increasing the supply of market-rate housing for service workers, line production workers, and entry-level workers.  Registration link to: 1st Annual AEI Conference on Economical Housing By Design sponsored by the National Multifamily Housing Council, which will take place on Tuesday, October 4 at our offices in Washington, DC.  There is no charge to attend this event, which will also be live-streamed and available post-event on-line.  Readers feel free to pass this invitation along to colleagues and other interested parties.

Use this link to RSVP. There is no charge for this event. 

Buzz: What is one thing that people should know about the event, prior to signing up for it?

Pinto: Attendees will learn why expanding the supply of market-rate economical housing benefits the entire community and why this expansion is a necessary ingredient for balanced economic growth of communities all across the country. We cannot continue ignoring service and manufacturing line workers who represent 38 percent of all private and public jobs.  These are the workers who help us every day be it in retail sales, landscaping, food & beverage services, customer service, light manufacturing, or as stock clerks, cashiers, health aides, and laborers.

Buzz: The term Economical Housing by Design is a new term.  Can you explain how this term came about and how this term impacts the economy?

Pinto: The term Economical Housing by Design is purposeful.  While economical and affordable are normally be synonyms, in the United States the term “affordable housing” has come to mean “affordable housing by subsidy.”  So we need a new term to describe naturally occurring market-rate, economical housing.  Specifically, the focus of the conference is on market-rate economical housing by design for communities that work.

The term economical has both a supply and demand component. On the demand side, 38 percent of all employed individuals work in service and line production occupations.  These workers need economical apartments near their places of employment.  On the supply side, only ten percent of new apartments have market-rate moderate rents.  This is because land use restrictions greatly limit the ability of developers to undertake economical apartments profitably.

If you are unable to attend, you are welcome to watch the event live.  A full video will be posted here within 24 hours after the event.

Buzz: Thanks for taking the time to speak with us. We are looking forward to the first annual AEI conference on economical, workforce, and entry-level housing.

Some General Info:

What:  First Annual AEI Conference on Economical, Workforce, and Entry-Level Housing
When: Tuesday, October 4th, 2016 | 12:00p.m. – 5: 30 p.m.
Where: AEI, Auditorium
1789 Massachusetts Avenue NW
Washington, DC 20036
How: Use this link to Register. There is no charge for this event.

And it’s not too late to register for the AEI/CRN 5th Annual Conference on Housing Risk, sponsored FICO® will take place on Oct. 5 and 6.  Register using RSVP button at:

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