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Yesterday I was afforded the opportunity to listen to a handful of presentations at the 17^th Annual Affordable Housing Conference hosted by . One that proved to be unexpectedly informative was a presentation on the ins and outs of buying and selling affordable housing projects by Armand Tiberio, senior director of the Tax Credit Group at Seattle-based law firm brokerage firm .

Tiberio focused his presentation around the growing trend of affordable housing projects becoming strong and consistent investments.

“If you ask people who have affordable multi-family and market-level multi-family in their portfolios how each are doing, most would say that affordable housing has been the counterbalance throughout the recession,” he said. “It’s remarkable to see affordable housing transactions outpacing market-level transactions.”

Tibiero noted that the affordable housing deals may not have the standard 8 to 10 percent rent increases that market-level deals have, but the overall economics of affordable housing has an amazingly steady, albeit low, return. Marcus & Millichap completed 75 transactions last year, most of which were affordable multi-family deals. This was a 15 percent increase from 2009.

Of those deals, 75 percent of those transactions were financed by and 10 percent by . One reason is that both Fannie Mae and Freddie Mac have been more willing to finance affordable housing than market-level deals because default rates for affordable multi-family housing has only increased by about 0.1 percent throughout the recession. Whereas default rates for market-level multi-family housing has increased by about 8 percent.

Tibiero noted the dynamics of who is buying and selling multi-family housing has also changed over the past decade. In 2008, for example, 65 percent of all multi-family purchases were made by the private sector. That number jumped to 84 percent in 2009. Conversely, about 23 percent of the purchases in 2008 were made by the public or institutional sector, and only 8 percent in 2009. The transactions for the public and institutional sector were about 25 percent higher ten years ago, he said.

Tibiero pontificated that the reason affordable multi-family housing is becoming such an economic driver in the investment world is that a few fundamental changes in the U.S. are pushing people to multi-family housing. One is that people of the aptly dubbed eco-boomer generation are getting to the renters age, between 20 and 30. Other reasons include less of a national emphasis on home ownership and a growing number of married couples deciding not to have kids. New home ownership is down more than 6 percent over the past decade, he aid.

If you add all these things up, investing in affordable multi-family should prove consistent in the long term. Portland has a 7 percent multi-family vacancy rate right now, the 15th highest in the country. Considering the urban growth boundaries and the large population growth in the under 30 sector, affordable multi-family housing should prove to be a good investment here in town over the next several years.

Tibiero used a project of his in Park City as an example. About half the units on the development were designated affordable housing (about $100 a month less) and the rest were market-level. Both types of units were identical in look and size. What he noticed was that the market-level units and the affordable units were competing against each other because the population base around the development predominantly qualified for affordable housing.

“That is the overall phenomenon here,” he said. “In the areas where affordable housing units are being developed, there is a strong contingent of the population that qualifies, meaning affordable housing units are more attractive to the customer base then market-level units.”