Catalyst Housing Group, in partnership with the California Community Housing Agency (CalCHA), has expanded into Southern California with the mission of making affordable housing more accessible to middle income families. With its recent acquisitions, the company has brought 700 middle income units to the market with plans for continued growth.
The transactions of the company’s two new Glendale market-rate properties totaled $525 million and will permanently be transitioned to rent-restricted housing for middle income families. The properties are located at 546 W. Colorado Street and 275 W. Lexington Drive and will each provide 205 and 494 units, respectively, to middle income families in Glendale. Rental rates at each property ranges from approximately $2,000 per month to just under $4,500 depending on the size of each unit.
“I would say we quickly came to the conclusion that that model has been successful generally in creating millions of affordable housing units across the state. We just didn’t feel like it was enough to be the only solution given the scale of the housing crisis in California,” Jordan Moss, founder of the organization, said.
“We were watching this growing trend of the hollowing out of the middle income, this barbell effect where you have housing production for low income households as well as a ton of housing production of really expensive stuff on the other end of the spectrum but nothing in the middle.”
Catalyst Housing Group was created in 2015, beginning with several acquisitions of middle income properties in Northern California. Moss said these early acquisitions led to the founding of CalCHA, which has helped tackle the middle income housing crisis throughout the state of California.
“The question we were asking ourselves is how do we have fully functioning communities if we can’t adequately house our essential workforce where they work, and secondarily, is there any programmatic capital structure that will also allow us to address the middle income?” Moss said.
“The culmination of our efforts was the launching of CalCHA, which was the first ever government entity in California that focuses exclusively on middle income housing.”
Since the formation of CalCHA, the organization has acquired approximately 2,800 middle income units in nine communities throughout the state. In Northern California, Catalyst recently added The Creekwood Apartments, a 309-unit property in Hayward, to their growing Northern California portfolio. Other properties in Northern California include Annadel, a 390-unit apartment complex in Santa Rosa; Arbors, a 162-unit housing complex in Livermore; Serenity, a 342-unit complex in Larkspur; as well as many others.
In total, the partnership between CalCHA and Catalyst has led to the creation of three additional housing agencies and the production of more than 4,000 housing units in the past two years. Catalyst’s non-profit arm, the Essential Housing Fund, also works to provide rent subsidies to public school teachers, while it’s Catalyst Innovation Lab advises, invests and raises capital for PropTech entrepreneurs.
Moss said in general, housing for those in the middle income bracket has become increasingly difficult to come by throughout California. A recent report from Kidder Mathews also found this to be true. The report showed that in the first quarter of 2021, vacancy rates in Los Angeles rose 19.1 percent in the past year as residents left the city to find more affordable housing. At the same time, rental rates averaged $1,425 for a studio to $2,586 for a three-bedroom apartment.
A similar report by Kidder Mathews looked at the multifamily market in the Bay Area. According to the report, rental rates in the first quarter of 2021 ranged from $1,756 for a studio to $2,966 for a three bedroom with climbing vacancy rates as well. In the first quarter of 2021, vacancy rates totaled 8.4 percent while at the same time last year was at 5.5 percent.
“It has increased in almost every major metro across the country,” Moss said. “I would say generally if you back up and look at long term trends of rent growth across major metros in this country compared to the income growth of essential workers, you will see this disconnect of affordability for middle income workers.”