The national affordable housing crisis is intensifying in both the rental and for-sale markets, driven by a severe lack of supply. Developers point to prohibitive costs for land, materials, and labor, along with restrictive zoning regulations, as key barriers to constructing quality, low-income housing. Compounding the issue is rising local opposition, or “NIMBYism,” as residents in areas with soaring property values resist the development of affordable housing.
“All of real estate is being challenged by higher interest rates and by higher construction costs,” said Jonathan Rose, founder and CEO of development and investment firm Jonathan Rose Companies. “But there’s also a lot of support, and our job is to weave the pathway in between the complexities, the challenges and the opportunities.”
Developers recently received a significant boost from a newly passed tax and spending bill that expands the Low-Income Housing Tax Credit (LIHTC). The legislation permanently increases the 9% credit allocation to states by 12% and lowers financing requirements. Developers can sell these credits to investors to help fund their projects.
Affordable housing advocates have lauded the expansion, calling the LIHTC the nation’s most effective tool for building and preserving affordable rental housing. “This legislation delivers a significant expansion of the credit by incorporating key elements of the Affordable Housing Credit Improvement Act, aimed at boosting the supply of rental homes across urban, rural and tribal communities,” said David Dworkin, president and CEO of the National Housing Conference.
Dworkin noted that the changes, combined with adjustments to another developer tax credit, are projected to produce or preserve more than one million additional affordable rental homes between 2026 and 2035.
This legislative support aligns with strong investor demand in the affordable housing sector. The Jonathan Rose Company recently closed a $660 million impact fund dedicated to preserving and improving affordable and mixed-income multifamily housing. Rose noted increasing interest in housing-related investments from family offices and foundations.
However, significant obstacles remain. The Trump administration has proposed a $27 billion cut to federal rental assistance programs, a move reportedly causing some lenders to hesitate. While the cut requires congressional approval, and the House has shown bipartisan support for housing funding, the proposal introduces new uncertainty.
Separately, the Senate Committee on Banking, Housing and Urban Affairs is advancing new bipartisan legislation to address housing affordability. This package focuses more on removing regulatory barriers and funding infrastructure to support for-sale housing rather than directly aiding low-income rental construction.
Furthermore, the expanded tax incentives do not resolve the issue of local opposition. Even mixed-income developments with a small percentage of affordable units face pushback. Rose argues the solution lies in improving the quality of the projects themselves.
“One of the reasons why communities oppose affordable housing is because a lot of affordable housing built in the ’60s, ’70s and early ’80s was cheap and ugly,” Rose said. He advocates for a new standard of well-designed, sustainable, and aesthetically pleasing buildings, which also lower long-term operating costs for owners. “We’re deeply committed to creating beautiful buildings.”
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