News
Comparing the Costs of New Construction and Acquisition-Rehab In Affordable Multifamily Rental Housing
A recently published research
working paper from the Center for Housing Policy titled Comparing the Costs of New Construction and
Acquisition-Rehab In Affordable Multifamily Rental Housing uses
the lifecycle cost methodology to compare the total cost of developing and
maintaining multifamily affordable rental housing for acquisition-rehab and new
construction projects. The researchers’ analysis of a sample of more than 200
properties found that, all else equal, new construction added approximately
$40,000 to $71,000 (25 to 45 percent) per-unit to the lifecycle costs.
The report findings
suggest that acquiring and rehabilitating existing multifamily rental housing
may be significantly more cost-effective than new construction when considering
the costs of both developing a property and maintaining it in decent condition
over a full 50-year lifecycle.
The
research paper is one component of a suite of products that focus on the costs
of developing and maintaining affordable multifamily rental properties. The full suite of products includes:
·
A technical paper describing how the lifecycle cost adjustment
works and its impact on total development costs;
·
An online lifecycle cost modeling tool (L-Cycle, available at
www.housingpolicy.org/lcycle), which allows users to input financial data on a
property and obtain a quick estimate of the project’s ability to meet its
long-term capital needs
·
A policy paper discussing the implications of lifecycle
underwriting for policy and practice; and
·
A detailed research paper, to be submitted for publication to a
journal, documenting the full methodology and results of our research.
— Posted on 3/25/2013