How multifamily leaders can tackle the housing crisis


Lee Kiser is a multi-family expert, active real estate agent and director of Kiser GroupChicagoland’s leading multi-family real estate agency.

When I started my career as a multi-family real estate agent in the mid-nineties, I didn’t even know what Affordable Housing meant. I even sold a large apartment building with a courtyard on the north side of Chicago, which was a Section 42 building secured with a HAP contract, and I still didn’t understand what it meant. Today I am much more experienced, but I still don’t really understand what we are trying to do as a society.

Note that I capitalize “Affordable Housing” in some cases and lowercase “Affordable Housing” in others. This is intentional. Affordable housing (in capital letters) refers to multifamily housing that is directly subsidized by the federal government, usually through HAP contracts (HAP) or low-income tax credits (LIHTC). Another type of affordable housing (with lowercase letters) is for low- to middle-income renters and has no direct subsidy from the federal government. This housing occurs naturally and is commonly known by NOAH (Naturally Occurring Affordable Housing).

Few will talk about the United States (and frankly most of the world) being a shortage of affordable housing; however, many will argue about the best way to tackle the problem. Below are some of my thoughts on the pros and cons of affordable housing and NOAH properties.

Affordable housing

Through the Department of Housing and Urban Development (HUD), the US provides for the housing needs of people who cannot afford the market rent. HUD has programs for preserving existing affordable housing (HAP contracts and vouchers) and for developing new or refurbishing existing affordable housing (LIHTC).


The rent of eligible tenants is subsidized based on their income level, which allows them to get quality housing that they can afford. The subsidy is paid directly to the owner. The grant also requires a minimum score on an annual safety and condition inspection. This reduces the number of HAP contract homes that fall into disrepair, resulting in a consistent level of housing for residents.

When HAP contracts expire, residents who have qualified under the HUD Affordable Housing Guidelines can carry vouchers, which can be applied to multi-family housing on the market if the voucher is accepted by the housing company.

In addition, LIHTC awards are presented annually to eligible developers, resulting in several new construction or recently renovated affordable homes.


New HUD HAP contracts are not issued. In addition, the compliance required for a HUD contract is so important that even small providers of affordable housing often require full-time staff positions to meet standards, driving up costs.

LIHTC credits are available, but demand far exceeds supply and few projects make it to the finish line. The development of LIHTC is also different from the development of the market interest rate. I’ve found that the cost is two to three times higher than traditional multi-family construction because of the contractors required and all the soft money involved.

Finally, developers of affordable housing are typically compensated more up front by soft costs (developers fees) than by operating the building, resulting in a push to have the homes built rather than maximizing their operation and maintenance.

NOAH properties


As the name suggests, various market forces result in ‘natural’ affordable housing – some areas do not have a socio-demographic basis for higher rent levels. Housing providers adapt to the market rent.

The lower the rent, the lower the cost of the building, and generally the higher the ceiling, giving multi-family investors an incentive to move to lower socioeconomic areas, buy buildings, and continue to provide affordable housing.


NOAH does do not address the lowest of the lowest income groups. And if low-income ‘market’ rents don’t rise, buildings often collapse decay when systems need to be replaced or costs rise.

In addition, lower-income demographic geography is usually concentrated in one area, rather than integrating lower-income populations with higher-income populations.

So, what can we do?

Neither system is effectively meeting the needs of our society and country — if they were, the crisis wouldn’t exist. I’ve found that few people in the multifamily industry (investors, lenders, brokers) understand or even know about the issues. In my opinion a “let the market go where it pleases” mentality will not solve the problem; government programs alone will not solve the problem. I think it must be a combination of both.

The first steps for this are:

1. Share knowledge and understanding.

A better understanding of both the private sector and the issues and challenges facing housing providers and government at all levels (local, state, federal) of market housing operations and development is critical to finding crossroads.

Business leaders and multi-family professionals can familiarize themselves with the different types of affordable housing and with the issues involved. If you have the opportunity to provide affordable housing, take your time exploring your options and really learn about the subject.

2. Develop incentives together.

Once intersections are identified, I think we need to create incentives for the multifamily industry to solve the problem. There are countless examples of attempts. An example of an incentive is offering discounts on certain operating costs (taxes, utilities) if housing providers maintain their rent at 60% of the region’s median income.

3. Collaborate on a new protocol.

There are only enough ongoing programs to address the tip of the iceberg of the affordable housing crisis. I believe that we need broad reforms, recalculation and implementation of programmes. Affordable housing associations could draw up a new protocol nationally, regionally and locally. These associations could function in the same way as economic development councils or chambers of commerce, and could include an equal number of affordable housing administrators, NOAH housing providers, and competitive investors and developers. All multi-family decisions must be made within these groups. Creating and maintaining affordable housing can become as commonplace as the market price.

In short, the longer the players remain in their own orbit, the deeper the crisis becomes. The more we recognize that we need to tackle the problems collectively, become transparent and work together, the more likely we can find solutions. Business Council is the leading growth and networking organization for entrepreneurs and leaders. Am I eligible?


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