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Multi-housing news ” Editorial Director Suzann Silverman presented the second annual Lifetime Achievement Award to Ronald Terwilliger, Founder and Chairman of the J. Ronald Terwilliger Foundation for Housing America’s Families and Non-Executive Chairman of Terwilliger Pappas Multifamily Partners. Terwilliger received the honor in a virtual fireside chat at MHNthe annual Awards of Excellence event on December 2.
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Silverman: What do you think are the most important factors that have caused the biggest changes in the multi-family industry during your career?
Terwilliger: Housing is a basic human need – food, clothing and shelter are basic human needs. Demographics have shown that about one in three people in this country rents. We serve a population that wants rental housing, but not all of them want apartments. Single family homes have become one of the big new industries. One in three people who rents, rents in single-family homes. One of the large single-family businesses owns 80,000 to 85,000 units and has found economic sense in how to manage them.
It’s just about responding to demographics and changing your product to evolve as people’s tastes change. There are more people working from home. There is still a need for rental housing.
I have to say that 2021 has been the most amazing year I have ever seen in rental housing, at least in market-rate rental housing.
Silverman: What really stood out to you about 2021?
Terwilliger: It was just the rental prices spike at market rates throughout 2021. We had a project in December 2020 that brokers said was worth $ 295,000 per unit and six months later we had it. sold for $ 395,000 per unit. We have also seen extraordinary rental growth and absorption. In my main company, we budget the absorption at 20 units per month. This year the average absorption was probably 40 units per month, and one of our projects saw the absorption of 60 units per month. This is now being offset by an extraordinary upward movement in construction prices, making the affordability challenge for low-income people greater than ever before.
Silverman: What are the main obstacles to solving the housing crisis?
Terwilliger: In a nutshell, it’s income. This is the problem in the United States and around the world. There is not enough income for a large part of our population to afford housing at market price. We’re all trying to figure out what we can creatively come up with to add to the offering.
We must increase the supply of housing and get the private sector to re-engage as it did in the early 1980s in the construction of mixed housing. And we need to provide significant support to low-income people. Section 8 coupons serve an important purpose, but only one in five qualifying people can get them, and many owners won’t accept them. We need to get these units to the high opportunity neighborhoods where they should be.
Silverman: So where to start ?
Terwilliger: Part of this will require bipartisan legislation, as housing is expected to be a non-partisan solution. It’s a remarkable thing how little attention has been paid to housing by Congress and the President over the years. We need to make Congress more aware of the problem and be willing to allocate more resources. At the same time, we have a big problem with NIMBY, or Not in My Backyard. Affluent suburbs have some of the best neighborhoods where children have access to decent schools. But they are fighting tooth and nail to prevent the development of apartments in their neighborhoods. This is one of the reasons we don’t get housing where it should be and we don’t have enough.
Silverman: Starting with Congress, is there enough momentum on both sides of the aisle to come together on this topic?
Terwilliger: Housing is really a basic human right, but governments don’t think so and don’t fund it. It tends to get lost behind the funding of education and health. I walked the halls of Congress with my foundation for three years and spoke to over 60 senators. The first thing I had to do was explain to them that there was a housing crisis in this country. They didn’t know it. Then I had to say that it was important for Americans not to have affordable housing. Then I had to prescribe how to fix it, which was more subsidies on the supply side and more subsidies on the demand side and a strong emphasis on preservation.
Silverman: What other trends are you currently seeing for the industry?
Terwilliger: A lot in our industry is focused on people being able to work from home. When we build one bedroom units now, we try to make sure there is a workstation. We also make sure that there are common areas where people can take their computers and work there.
Many families are looking for single family rentals, so businesses in my industry are getting involved in single family rentals. We will be completing our first project near Orlando. Families tend to avoid multi-family spaces because they want a bit of a backyard for their kids to hang out.
The affordability challenge can lead to the creation of micro-units or smaller cohabitation units, with adults living in a student housing context. There has to be something to provide more affordable housing. The combination of rent increases and the continued rise in land prices will exclude more and more Americans from the market. They’re going to double down or try to find affordable housing, but there just aren’t enough of them. We are short of approximately 7 million rental units in this country.
Silverman: Looking back, what do you think are the biggest accomplishments in the industry during your career?
Terwilliger: I think the multi-family industry has been responsible in largely avoiding overbuilding. To get anything funded you have to have a really viable site, a market need, and a product defined in an appropriate way. The combination of industry players and the people who fund have kept us on very good lines.
We have also adapted to changing trends, such as the use of tenants using social media and online ads to find apartments. Virtual technology has become very useful in identifying your project with prospects as a place they want to live.
Silverman: One last tip for the industry?
Terwilliger: Nadarajan “Raj” Chetty, William A. Ackman Professor of Public Economics at Harvard University, once did a study which showed that the zip code you were born in is likely to determine the outcome of your life. . You get multigenerational poverty because people can’t go to decent schools and find good jobs to get out of poverty. We need to have affordable housing and have it in the right places in this country, so low-income people have a chance. We need to give them a hand and let them do whatever they can instead of reducing them by giving them no chance.
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