Woes follow home buyers; Low-cost housing can't meet area need

COLUMBIA -- The many Grand Strand residents who need affordable housing likely will continue to struggle as the sector is slow to recover, despite an improving national economy and as a result of potential funding challenges.

The most recent economic indicators show improvement and point to a need for increased manufacturing and some job growth, said Richard Kaglic, the regional economist for the Federal Reserve Bank of Richmond, which serves the Carolinas.

The bank's most recent Carolinas business activity index survey showed that business owners are optimistic about the economy, which could translate into more spending and more hiring, he said. Unfortunately, the economic growth isn't likely to translate into a rapid real estate recovery or into more affordable housing for those who need it.

The need for affordable housing is tremendous along the Grand Strand and throughout the state, officials said Wednesday at thePalmetto Affordable Housing Forum in Columbia.

Kaglic said the affordable housing sector of the real estate market will likely take longer to recover than other parts.

"You're talking about folks who on a bank's balance sheet are going to be a riskier loan, and in that, two things happen - they either raise qualifications or costs," he said.

Many homeowners will not even be able to afford to buy a house despite the dramatic drops in prices, Kaglic said.

"Homes are much more affordable today, they remain nearly as affordable as they have ever been, but the problem doesn't seem to be in pricing," he said. "Affordability doesn't equal attainability."

With so many people out of work, or making less money than they once were, homeownership is not a possibility, said Kevin Connelly, the president of the Affordable Housing Coalition of South Carolina and the president of Connelly Builders Inc.

"Even though they could buy a house at a lower price than ever, it's still out of reach," he said.

The demand for affordable housing is overwhelming, Connelly said. His company owns 20 affordable housing projects throughout the state, including two in Georgetown County. All of the projects have been full within three months, and many have waiting lists.

The affordable housing industry faces two significant challenges: an incorrect perception of what the projects are and limited funding, Connelly said.

Some believe that the low-income housing will bring an unwanted criminal element into their communities, but the majority of renters have jobs, and many are single-parent families who need a break, he said. His company and others run background checks on potential new tenants to weed out any renters that could cause problems.

An even larger problem though, Connelly and others said, is the lack of funding for the affordable housing projects.

"Financing is always the biggest barrier," said Cliff Rudd, the community development administrator for the city of Myrtle Beach and executive director of Home Alliance Inc. "That's what's holding us back from providing affordable housing to those that need it."

Affordable housing projects are typically funded through federal government grants or tax breaks, such as the Low Income Housing Tax Credit. The LIHTC is an incentive to get private companies to invest in affordable rental housing, which allows developers to receive and then sell tax credits to raise money to fund the projects, resulting in more affordable rents. The properties built using the credit must set aside a minimum number of units that will have rent restrictions and require the renter to meet certain income levels.

The S.C. State Housing Finance and Development Authority administers the tax credit program and has more than four times as many applicants as credits available.

Rudd described the need along the Grand Strand as insatiable in large part because of the nature of being so dependent on the service industry and the current high unemployment rates.

Carol McCall, who works for the Housing Authority of Myrtle Beach, echoed his comments. The authority, which administers low-income, Section 8 housing vouchers, had more than 1,200 people apply to be on the waiting list when it opened registration for two days in September, she said.

The authority applies to every source of funding it can to provide other programs or additional housing, McCall said.

"It doesn't matter what program it is, there is not enough of it," she said.

McCall and several others expressed concern about potential cuts in spending on housing programs as the federal government's budget is being negotiated.

The budget challenges for the federal government may translate into less funding and fewer affordable housing projects, Connelly said. A cut in funding would mean fewer units built and that more families will have to continue to live in substandard or dangerous housing, he said.

There is money available for developers once they get a tax credit to develop the properties, said Tracy Doran, the president of the Humanities Foundation, who moderated a panel about funding for affordable housing projects at Wednesday's forum.

"Once you get these credits, you can get equity, but going forward, there is a concern with HUD cuts," she said.

The investors are only willing to put the money in if they get the tax credit, Doran said.

"The most important thing we can do is educate our legislators; they need to see what this program creates," she said.

The S.C. housing agency advocates to legislators about the importance of affordable housing programs and urges the state delegation to support funding, said Valarie Williams, the executive director of the S.C. housing agency.

"The demand for affordable housing will continue to be great," she said. "The federal resources are just drying up, so we have to be better at coordinating and leveraging to make it happen because otherwise, people are going to suffer."