Waterford Property Co. Targets Middle-Income Housing Market

Affordable housing is currently grabbing headlines, but there is also an attainable or middle-income housing shortage plaguing California. Waterford Property Co. is targeting this missing middle with it latest business plan. The investor has partnered with the California Statewide Communities Development Authority to acquire and convert apartment communities into middle income housing.

“California is in the midst of a severe housing shortage for all income levels, but one income demographic that continuously gets overlooked is the missing middle,” Sean Rawson, co-founder of Waterford Property Co., tells GlobeSt.com. “Defined as households that make between 80% to 120% of the area median income, the missing middle has been one of the most difficult income segments to provide housing stock.”

Lack of resources is one reason this is an overlooked and challenging asset class. Middle-income housing has fewer loan products available or government programs. “Traditional affordable housing has various financing sources, such as federal and state tax credits, used in the production of low and very low income housing; moderate income housing does not,” says Rawson. “As developers and owners of both market rate housing and affordable housing, Waterford acutely understands the need to be able to provide housing for all income levels. We believe our focus on the middle-income segment will help one of California’s most underserved populations—workers who are critical to our economy and critical to individual communities. This includes teachers, public safety employees, essential workers, government employees, bank tellers and childcare workers.”

Already, Waterford has completed two deals this year, totaling 1,000 units. It plans to convert all units into workforce housing. “Waterford is working on projects within innovative cities that have acute housing shortages. Our approach to the middle-income housing segment is holistic. Instead of being project driven, Waterford’s goal is to help cities analyze the types of housing they need,” says Rawson. “Then we work with them in determining how to assist in the creation of those housing types. The middle-income segment is one tool in the tool box. Due the strong demand for this income segment, many cities have reached out to us looking to explore the program.”

The firm doesn’t have hard goals in terms of acquisition volume this year, but Rawson says it is committed to the asset class. “We know that the need for affordable housing in California at all income levels is significant,” he says. “Our objective is to proactively work with cities that recognize the value of this program as we believe that there remains strong demand by affordable housing investors to invest in this space where deals pencil.”