I was reading some thoughtful commentary in HousingWire recently about something that's been on my mind for years now. The piece discusses how while the new ROAD to Housing Act is definitely a step forward for building new homes, we're overlooking a critical problem with the housing we already have. Much of our existing workforce housing stock across the country is aging, with the national rental housing stock hitting a median age of 45 years. These older communities need serious reinvestment just to keep them safe and operational, but owners are getting squeezed from all sides with rising insurance, tighter regulations, and higher borrowing costs.
Here's what really struck me about the argument. For decades, investors have treated workforce housing like any other real estate deal: buy it, improve it, flip it, and exit within a defined timeframe. But that model is showing its cracks. When an older apartment complex actually needs work on fundamental systems like roofs, electrical infrastructure, water systems, and climate adaptation, you're not talking about cosmetic upgrades that boost sale prices. You're talking about long-term investments that keep the property functional for decades. According to the piece, that's exactly what happened with S2 Capital's fund when rent growth didn't materialize and capital markets tightened. The assumptions that made the deal pencil out simply fell apart.
The article makes an interesting point about efficiency. Small and medium multifamily properties make up more than half of our affordable housing stock nationally, and preserving what we have often costs less than building from scratch. Yet we've lost roughly seven million rental units under $1,000 over the past decade. That's a staggering number when you think about working families trying to find affordable places to live.
What really resonates with me is the infrastructure comparison. The piece argues that workforce housing should be financed and evaluated more like a bridge or water system, as something meant to provide reliable service over 50 to 75 years, rather than as a five-year investment cycle. That's not just philosophical, it changes how you structure the capital behind these projects. One interesting development the article mentions is that the Federal Housing Finance Agency has already started excluding workforce housing preservation loans from Fannie Mae and Freddie Mac's volume caps, acknowledging that this kind of stock deserves its own financing approach.
What I am seeing locally here in the Bay Area and throughout the East Bay is that this preservation challenge is very real. Our older multifamily communities, especially those serving working families, need serious capital to stay competitive and functional. Whether we're talking about Fremont or any other part of the region, the idea that preservation financing should match the actual long-term nature of these assets makes a lot of sense to me. It means being realistic about investor expectations and blending different capital sources, rather than expecting everything to work within a traditional real estate cycle.
