Affordable Housing Crisis Not Just a Lower Income Phenomenon, Former Fannie Mae Exec Says
July 8, 2022 | Sarah Borchersen-Keto | Nareit
The affordable housing crisis facing the United States today is not just a lower-income phenomenon, but impacts individuals making six-figure salaries, says Kenneth Bacon, co-founder and managing partner of financial advisory and asset management firm RailField Partners, and former Fannie Mae executive.
Speaking on the REIT Report, Bacon, who also serves as board chair at Welltower Inc. (NYSE: WELL), said “if you pull back the covers and look at the data, you’ll see that young professionals, people earning six figure salaries in cities like San Francisco and New York, are hard pressed to find places that they can afford.”
Bacon said the biggest problem behind the lack of affordable housing today is that the building process has become too long and difficult.
As for the state of the commercial real estate sector today, Bacon said that as interest rates rise he sees a return to a “more normalized investment ecology.” That in turn will mean that investors are “going to have to work a lot harder to get some of these returns. I think some deals just aren’t going to get done.”
Turning to governance issues, Bacon noted that executive boards today are dealing with many non-economic issues “that you can’t duck…the responsibilities of a board have shifted.”
Human capital, climate, and responding to wider social political changes are three areas all coming to the fore that boards need to address, Bacon noted. While the governance aspect of ESG is “very manageable,” the environmental and social aspects “are going to grow over time and become more difficult to deal with,” he said.
