T
he affordable housing crisis is worsening, with a severe shortage of supply, particularly in the apartment market. Developers are deterred by rising costs for land, materials, and labor, as well as increasingly restrictive zoning regulations. NIMBYism, or "not in my backyard," is also on the rise, with residents fighting affordable housing in their neighborhoods where home values have skyrocketed.

    Jonathan Rose, founder of the Jonathan Rose Companies, notes that real estate is facing challenges from higher interest rates and construction costs, but sees opportunities amidst the complexities. His company recently closed a $660 million impact fund dedicated to acquiring and preserving affordable multifamily housing.

    The recent tax and spending bill has provided a boost for developers by expanding the Low-Income Housing Tax Credit (LIHTC). The legislation permanently increased the 9% credit allocation to states by 12%, making it easier for developers to secure financing. Affordable housing advocates hail this as a significant expansion of the nation's most effective tool for building and preserving affordable rental housing.

    The LIHTC changes are expected to produce or preserve over 1 million additional affordable rental homes between 2026 and 2035, according to David Dworkin, president of the National Housing Conference. However, a proposed $27 billion cut in federal rental assistance programs could hinder progress. The Trump administration's proposal has already caused some lenders to pull back.

    Despite these challenges, there is strong investor demand for affordable housing investments, with family offices and foundations showing increased interest. The Senate Committee on Banking, Housing and Urban Affairs has announced bipartisan legislation to expand housing supply and address affordability, but this package focuses more on making for-sale housing more affordable rather than building low-income rental housing.

    NIMBYism remains a significant obstacle, as even mixed-use buildings with designated affordable units face pushback from neighbors concerned about home values. Jonathan Rose emphasizes the importance of creating high-quality, well-designed developments that benefit owners and communities in the long run.