It still looks to be a glass-half-empty kind of year for affordable housing developers.

They anticipate a better but tough road ahead in 2018. Even with the uncertainty of tax reform behind them, more than 48% of recently surveyed developers expect housing finance conditions to worsen by the end of the year. About 31% say conditions will improve, and 20% say they’ll be about the same.

The somber outlook comes amid worries about tepid low-income housing tax credit (LIHTC) prices, rising interest rates, and increasing development costs.

Even though nearly half of the executives expect conditions to decline, it’s still an improvement over last year, when 70% of the respondents predicted that finance conditions would worsen in 2017. A year ago, developers were dealing with the anxiety of tax reform, which hung over the industry from January until December, when legislation was signed. Although the housing credit and private-activity bond programs ultimately survived, lawmakers adopted a lower corporate tax rate and made other changes that could significantly reduce the production of affordable housing.

An overwhelming 83% of the surveyed developers said tax reform was the most significant issue of 2017. No other issue came close.

“The effect of tax reform was immediate,” says Dara Kovel, president of Beacon Communities Development, the development arm of Boston-based Beacon Communities, which is No. 5 on the list of firms completing acquisitions and No. 9 on the AHF 50 Owners list. “Not only did we have to close a deal under the pressing deadline of year’s end due to the changes in historic credits, but we’ve also seen an 8% to 15% drop in pricing for LIHTCs depending on the market and deal fundamentals. We’ve also seen delays in underwriting as our financial partners try to digest all the impacts. We hope we’re through the worst of it and are looking forward to moving past this tumultuous time for all of the housing programs.”

Ninety-seven affordable housing developers and owners took part in the January survey, which determines the annual AHF 50 Developers and Owners lists.


231 Developments started by the AHF 50 developers in 2017
22,540 Units started by the AHF 50 developers in 2017
214 Developments completed by the AHF 50 developers in 2017
20,592 Units completed by the AHF 50 developers in 2017
$0.99 Average price received for 9% LIHTCs for deals closed in 2017*
$278,142 Average development cost per unit on 2017 new-construction projects*
* All Survey Respondents

This year, 52 companies make up the AHF 50 Developers, as a result of two ties. Together, the firms started construction on 231 developments with 22,540 affordable homes last year. They also reported completing 214 communities with 20,592 affordable units.

That’s a drop from the 266 developments and more than 25,000 units started by the 53 companies that made up last year’s group.

LDG Development of Louisville, Ky., tops the new list after starting 1,763 affordable units in nine developments in 2017. The firm moved up from the fourth spot last year. LDG is followed by The Michaels Organization, of Marlton, N.J., and Plymouth, Minn.–based Dominium at the No. 2 and 3 spots, respectively.

At No. 14, Mercy Housing is the top nonprofit developer this year, after having started more than 500 affordable housing units in seven communities. The Denver-based organization moves up from No. 18 last year.

Despite concerns about the availability of funding and increasing development costs, the AHF 50 Developers estimate they’ll start 307 developments with more than 34,000 affordable units this year.