The Consolidated Annual Performance and Evaluation Report (CAPER) for Winston-Salem/Forsyth County has dropped. Yep, what is this and why does it matter to you? It is essentially a report card for cities and counties that receive certain HUD grants. It details how they spent the federal housing money over the past year and how they are meeting the goals they set in their five-year Consolidated Plan.
Inside of the CAPER you can find information regarding the current fiscal year (July 1, 2024 - June 30, 2025) such as funding amount received, housing outcomes, community programs, fair housing compliance, performance gaps, etc. According to the current CAPER, “Winston-Salem/Forsyth County is experiencing an extreme shortage in the supply of affordable and workforce housing. Population growth, stagnant wages, rising development costs, and an aging housing stock are all intensifying the crisis.”
This is not good news; it signals that a combination of factors is leading to a big shortage of housing that we need. Many writers would see this data and start crafting headlines to grab your attention and emotions. I would rather not, instead it is important to try and understand as much about why this is happening and what actions can be taken to improve our housing stock.
One factor that is recently impacting homebuyers is that “market sales prices… have exceeded HUD’s maximum sales price limit for eligible homebuyers to receive down payment assistance.” So our local home prices are rising to a point where what was once eligible for down payment assistance is no longer eligible. Unfortunately, “as the demand for affordable homeownership continues, so does the need for increased amounts in down payment assistance,” highlighting how our down payment assistance programs are lagging behind demand.
The rise in home prices is attributed to a mix of factors but a crucial one is that we strongly lack the supply that we need. Developers are not very incentivized to build housing that generates less income in rent, especially with mounting cost pressures for them. A pivot in mindset is needed; with the construction period in such turmoil, I think that a shift towards pre-fabricated housing could help. We are in a race against time to deliver quality units, affordably and quickly, and the traditional methods are not working.
The CAPER also details recent completed projects to help the housing shortage. Some of the projects mentioned are the completion of two new rental projects: Brown School Lofts and Pegram Landing II. The city and county were able to use funds to complete 226 units, which is better than nothing but not enough to address the extreme shortage we are facing.
Developers are facing headwinds to build, the construction industry is figuring itself out, and zoning is not conducive to letting developers work fast. There is no simple solution but the first step to finding a solution is to understand more about what is going on. In my mind I see pre-fabricated development as a potential way to lower the cost of delivering affordable units. I would like to see Forsyth County and W-S make it easy for developers to navigate zoning and codes.
I do not think that making money in the affordable space is limited to the big developers; an extreme shortage signals extreme demand. What money is lost by having lower rent or sales price is offset in part by the lower time to complete the transaction or lease up a property. Strong demand is a benefit for anyone that enters the space and can buffer some of the costs of lower rent.
Every city goes through struggles and cycles; what matters is the adjustments made. The choices made now will impact what is delivered in the next year and beyond. Real estate is not an instant thing, there are processes and a lag time, so we must be extremely proactive in trying to find solutions. Use your head, do your research and find opportunities while others are sidelined by listening to headlines.
https://forsyth.cc/housing/assets/documents/caper_25.pdf
