Unprecedented Climate Change

Over the past ten years, there have been hundreds of natural disasters and extreme weather events in the U.S., which have each exceeded one billion dollars in damage. Collectively, these disasters and severe weather events have caused the loss of more than 5,000 lives, an average of 232,000 displaced people per year and resulted in damages of over $800 billion. As the climate continues to change, so too does the type and amount of risk to our infrastructure, community, and safety. Regardless of whether natural disasters occur in the form of severe storms, floods, hurricanes, or drought, one thing is clear: there is an increasing need for property resiliency, specifically in affordable multifamily housing.

Natural Disasters Impact the Most Vulnerable

The effects of disasters are not felt equally across the country: low-income communities, communities of color and other vulnerable populations have been, and will continue to be, disparately impacted. The majority of individuals earning low incomes live in rental housing, and nearly half of all renters in the United States are cost-burdened. Renters in disaster-prone areas at a disproportionately greater risk of experiencing property damage, financial hardship and negative health impacts as a result. Improving resiliency is imperative not only for the mitigation of individual assets, but also the collective durability of the communities where affordable housing properties are located. This makes the need for improved resiliency an issue of equity as much as it is an economic issue.

Crises Require Collaboration

Although the market is seeing increasing interest in impact investment with a greater focus on resiliency from domestic and international investors, these efforts and interests are currently disconnected and disparate. There are a wide variety of public programs and private market efforts being used in the affordable housing space today aimed at increasing resiliency, but they were not designed with each other in mind.

The resiliency of multifamily properties and the benefits to renters and borrowers is not something that can be done unilaterally — it requires collaboration, incentivization of private market stakeholders and agreement among public policy advocates and private market investors. A greater alignment of efforts and new product innovations matching capital to need will be required for the industry to scale these efforts.

Exploring Resiliency in Multifamily Housing

In this paper, we survey the current market and assess the opportunity to mitigate against natural disasters, to understand how resiliency can be increased at the property-level, even before disasters happen. We consider disparate impacts of natural disasters to low-to-moderate income renters and interrelated mitigation efforts through property-level resiliency, and we synthesize a selection of public and private market approaches to addressing resiliency.

Our goal is to provide a representative sample of efforts and how they could be applied in conjunction with each other to address resiliency most effectively. With this research we are hoping to close information gaps and identify the benefits of programs that are more proactive than reactive. We also note that more work needs to be done in both the public policy and private market space so as to increase resiliency at the property level and protect underserved communities. This research will help Freddie Mac examine whether new system, process and product innovations in the multifamily debt space can better match capital to need. Download the full report to learn about our findings.

Download the full report