The Future of Affordable Housing - 405 Magazine

The Future of Affordable Housing

Despite housing costs sitting 25 percent below the national average, Oklahoma City had the third highest increase in rental rates between 2000 to 2020, urging voters to pass a $10 million subsidy in 2017 to help out.

Despite housing costs sitting 25 percent below the national average, Oklahoma City had the third highest increase in rental rates between 2000 to 2020, urging voters to pass a $10 million subsidy in 2017 to help out. Where will rental prices land as OKC’s population growth continues to spike demand for housing?

The affordable housing report delivered to the Oklahoma City City Council in August 2021 is probably best described as sobering.

Prepared by Denver-based Economic and Planning Systems, Inc., the report was pretty stark in its assessment of OKC’s affordable housing climate. Among the key findings was this observation: “Overall strong and resilient economy, yet portions of the population do not share in this experience.”

Yes, there is a bit of a Captain Obvious vibe to the observation. What city, after all, does not have a portion of the population that doesn’t share in the economic benefits? From jail inmates to homeless locals to the working poor, every city has demographics that don’t share in the prosperity of a rapidly developing city. When combined with the next key finding, though, it’s apparent that OKC is rapidly approaching an affordable housing problem, if not a full-blown crisis.

“Renters confront limited housing options, unaffordable rents, units in poor condition, and a regulatory framework that perpetuates instability.” 

“Affordable housing” is a phrase that will always be defined relative to context, so for governmental purposes, the metric is based on area median income, which for Oklahoma City is $73,200 – a number that is based on the wider OKC metro, not Oklahoma City proper.

The report noted that residents who earned below 60% of the area median income (roughly $50,000) were more likely to be:

  • living in housing in serious need of rehab 
  • struggling with a life event, compromising ability to cover living expenses or hold a job
  • trying to remedy bad credit history
  • having trouble finding accessible housing
  • experiencing discrimination.

The report also notes Oklahoma City has one of the highest mortgage denial rates in the country at 8% (in excess of 15% for Black and Hispanic applicants) as well as one of the country’s highest eviction rates. That’s followed by the observation that state statutes “give little recourse to renters to make repairs or protect them against landlord retaliation.” 

Maurianna Adams, chief community investment officer at MetaFund, said OKC is behind in addressing the issue of affordable housing. 

“Like other markets our size, Oklahoma City was already short on affordable units going into the pandemic,” Adams said. “The pandemic caused construction on affordable housing to stall, and then came materials shortages, supply chain issues, labor shortages and inflation. Now housing prices are spiking. We need policies that help us become more developer friendly for affordable housing, and we need better protections for tenants.” 

Mayor David Holt acknowledged that as the city grows, affordable housing “is going to be a growing issue.

“In 2017, voters passed the first bond issue that contained a specific subsidy for affordable housing,” Holt said. “Developers who want access to the $10 million set aside for the purpose must agree to keep a portion of the apartments or units at a certain rate.”

Outside of the city’s faster-growing suburbs, the closer you get to the urban core, the higher housing costs get, and that includes rentals and tenant-owned housing. In fact, the report noted that OKC had the third sharpest increase in rental rates between 2000 and 2020, when 10 similar markets (Kansas City, Nashville, Ft. Worth, St. Louis, Tucson, etc.) were compared. Only Tucson and Austin had more drastic increases. Much of that rental increase can be found in and around downtown. 

Given that much of the urban core is driven by a workforce who can’t afford to live in downtown, affordable housing in and around the urban core would seem to be important, given that OKC doesn’t yet have wide-reaching mass transportation, which means affordable housing and reliable transportation are critical. 

“As the desirability of our community increases, so does the cost of housing,” Holt said. “More people wanting to live here drives up the cost.”

The report also noted that as of 2019, no single tract of residential property in the area considered “downtown” by the U.S. Census is considered affordable. In fact, only two designations in downtown exist: non-residential and not affordable. 

“We have to start considering more innovative models,” Adams said. “Currently, developers have to create some properties available at below-market rates, and then rely on government or private sources to make up the difference.”

That is the model that the 2017 allocation typically funds. Holt said that most of the applicants for those funds have been working on a percentage-of-units basis. Adams, congruent with the reports recommendations, would like to see more innovative and flexible approaches, like community land trusts.

A community land trust is typically a non-profit that holds land – Adams suggests adjacent lots –  on behalf of a community and is, legally speaking, the long-term steward for the purpose of affordable housing and other community benefits. The city has been using federal community development block grants (under HUD) that subsidize “decent housing and a suitable living environment,” to quote HUD’s verbiage. They do allow some flexibility, and do provide funds for affordable housing in small blocks that are part of larger developments. 

The report noted that OKC needs a mechanism to ensure long-term affordability. Leaders don’t disagree with that finding, so the next step is shaping policies that become the mechanism. 

Photo provided