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Whether it’s in the sales or rental market, the affordable housing crisis is exacerbating. Especially in the apartment market, there is not enough supply that developers say is too expensive to build high quality, low-income housing.
They cite rising costs of land, materials and labor, and increasingly restrictive zoning regulations. The so-called nymbiism (the acronym for “not my backyard”) is also on the rise, with residents fighting affordable housing in their neighborhoods where home values have skyrocketed over the past five years.
“I think this is a tough time. Every property is being challenged by higher interest rates and higher construction costs, and all the frictions that make real estate difficult,” said Jonathan Rose Company founder and CEO, and founder and CEO of the actual real estate planning, development and investment company.
“But there’s a lot of support too. Our job is to weave paths between complexity, challenges and opportunities and find a corridor,” he said.
Developers like Rose have gained more support from recently passed tax and spending bills. We expanded the low-income housing tax credits by increasing the amount of available credits and reducing funding requirements. Specifically, the law has permanently increased the 9% credit allocation to the state by 12%. Developers sell these credits to investors to help fund projects.
“This is a huge boost to the creation of more affordable housing. In fact, the US has a shortfall of around 10 million units. This will not solve the problem of 10 million units, but it won’t help much,” Rose said, adding that he is seeing opportunities for space investors to grow.
Affordable housing advocates praised the bill for passing, stating that LIHTC is the country’s most effective tool for building and preserving affordable rental housing.
“The Act will provide a significant increase in credit by incorporating key elements of the Affordable Housing Credit Improvement Act, which aims to boost the supply of rental housing across urban, rural and tribal communities,” said David Dovehn, president and CEO of the National Housing Conference.
Dworkin pointed out both increased credits and changes to another tax credit for developers that facilitated qualifying for profits.
“Together, these changes are expected to produce or preserve over a million affordable rentals between 2026 and 2035,” Dworkin said.
Sendarro Verde, mixed income development at Jonathan Rose Company Harlem. Developed with L+M and Acacia networks.
Courtesy: Dreamscape Aerials
The affordable space appears to be in strong investor demand for both new developments and renovations. Jonathan Rose Company recently closed its $660 million impact fund. It says it is “dedicated to acquiring, preserving and enhancing affordable mixed-income multi-family homes in high-demand urban markets across the United States.”
Rose said there is growing interest in housing-related investments from family offices and foundations.
However, the work has a new wrench. The Trump administration has proposed a $27 billion cut in federal rental assistance programs for low-income tenants. Several lenders have reportedly been pulled back.
The cuts need to be approved by Congress, and Rose notes that the home has received years of bipartisan support to fund affordable housing.
Until his point, the Senate Committee on Banking, Housing and Urban Affairs announced Friday that it will advance new bipartisan laws to address housing supply and affordability. The package includes removing regulatory barriers to housing developments and funding communities that are building more homes that can be used for water and sewer infrastructure. However, the law aims to make homes for sale more affordable by helping to build more affordable and lower income rentals.
Still, the new tax incentives for rentals don’t help nymbiism, which appears to be rising correctly with the value of the home. Even mixed-use buildings with only a small portion of units designated as affordable are seeing pushbacks from neighbors who are concerned that such homes will undermine current and future home values.
Even before the expansion, LIHTC incentivized developers to more mixed-income buildings, with certain units being designated at affordable housing and other prices. Rose said that this type of high quality, greener development, will help owners in the long term by reducing operating and capital costs.
“One of the reasons why the community is opposed to affordable housing is because many affordable housing (built in the ’60s, ’70s, and early ’80s) are cheap and ugly, and my neighborhood doesn’t want that either,” Rose said. “We are deeply committed to creating beautiful buildings.”
