Demand without markets

I have just dropped $10M as developer of 100 units of affordable apartment housing. I am facing bankruptcy, but have avoided taking the food off the table of my tenant's kids, or being reliant on overly generous public subsidy......I'll know better next time.

A significant challenge associated with delivery of essential social infrastructure (such as affordable housing and residential aged care) is that, in many circumstances, market solutions are next to impossible to achieve despite substantial community demand. 

The Urban Institute and National Housing Conference has created a fantastic game to explore this challenge in the context of affordable housing.  Players assume the role of a developer of rental affordable apartments, with the ability to influence major variables impacting upon supply of affordable rental housing in the Denver area from a range of perspectives including:

  • Rental affordability for residents;
  • Profitability for you the developer; and
  • Costs to the public purse

I have tried a heap of different scenarios and have failed miserably...give it a crack.

Insights from this great exercise are relevant to many cases where competing priorities for public good are present.  So often the outcome is blame shifting between industry and public agencies - leading to continuation of the status quo. Needs of the most vulnerable are not met because markets cannot provide solutions, and public agencies cannot change the parameters of markets.  The math of finance, investment, development and asset management does not add up and a circuit breaker is required.  

If we want to create an innovative culture for the betterment of our communities, challenges such as these are a great place to start.