Kitty Wallace

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LOS ANGELES—Affordable housing developers and investors face a myriad of obstacles when trying to build new projects even as the need for affordable housing grows stronger year after year. Namely, there are three specific obstacles developers must overcome before ground breaks, says Kitty Wallace, executive vice president with Colliers International.

"The majority of the costs goes towards labor," she  tells GlobeSt.com. "Then there's the friends and family entitlement and finally, increased material costs."

Increased Labor Costs

A lack of labor stems from the last economic downturn when a lot of construction workers left the state of California and never came back.

"If you want to build new construction and don't have the established relationships or contacts, it's hard to find good, reliable contractors and sub-contractors," says Wallace. "Of course with such a high demand for workers, they are able to charge higher prices for services rendered. These workers charge a lot for their services."

Not in My Backyard

Builders jump through the appropriate hoops to get the requisite permits and regulatory paperwork in order to start building their multifamily projects. In some areas however, neighbors and business owners have adopted a "not in my backyard" mentality.