Against a backdrop of high construction costs, this year’s AHF 50 developers made significant strides in 2024, breaking ground on 45,640 affordable units.
That’s a nearly 10% increase in units compared with the total started by the prior year’s AHF 50 group.
The new list is led by Lincoln Avenue Communities, making its first appearance in the top spot, followed by Dominium, a firm that has consistently been one of the nation’s most-active affordable housing developers. Both companies had big years, each starting construction on more than 3,000 affordable housing units in 2024.
The overall improving numbers came as development costs remained high, although more stable, last year.
While there was a notable increase in the number of units started by the AHF 50, the number of projects remained about the same as last year, a sign that developers are building larger properties.
Going into 2025, many affordable housing developers expect a tougher road, according to Affordable Housing Finance’s annual survey that determines the AHF 50 rankings and collects other industry data. This year, 104 firms took part in the survey in February.
About 44.9% of the developers surveyed expect affordable housing finance conditions to worsen by the end of the year, while 31.5% said conditions will remain about the same and only 23.6% expect conditions to be better.
That’s a significant shift from a year ago, when 48% of the surveyed developers were optimistic that finance conditions would be better.
Part of the bleak outlook is attributed to the uncertainty around potential cuts to federal housing programs as well as the Trump administration’s plan to impose tariffs. Several developers cited concerns that tariffs would raise costs for lumber, steel, and other supplies.
Asked about their biggest concern in 2025, nearly 26% cited the elimination or reduction of federal resources, followed by the availability and price of low-income housing tax credits
(LIHTCs), 20%, and insurance costs and availability, 12%.
A year ago, the possibility of federal programs being cut ranked low among developers’ concerns, but that’s changed this year.
“The uncertainty about federal funding sources is on everyone’s mind,” said one developer.
Another reported that heading into the election he was optimistic about interest rates cuts as well as a potential change to lower the threshold of private-activity bond financing—from 50% to 25%—required to trigger the maximum amount of 4% LIHTCs available to a property.
“Neither seems likely to happen in the next 12 months,” he said. “We can only hope there are no significant cuts to the Section 8 program and other federal programs that support housing.”
Meanwhile, some developers remain hopeful that the Trump administration will pursue an agenda that embraces deregulation, potentially reducing development burdens and cutting costs. Still, any benefits from such changes are unlikely to materialize in 2025.
Another bright spot could be the expansion of the LIHTC program if the recently reintroduced Affordable Housing Credit Improvement Act is passed by Congress.
“We are preparing for any eventuality,” said one developer.
Let’s look more closely at some of the survey findings. AHF found that the average development cost per unit for new construction projects was about $436,273 last year. That’s about an 8.5% increase from the prior year.
In a separate question, most developers, 42%, reported that construction costs increased between 0% and 5% last year. About 33% experienced construction cost increases between 6% and 10%, and 11% saw construction costs go up between 11% and 15% last year. The remaining 14% of the respondents reported construction costs surging 16% or more.
Operating costs also spiked, averaging $7,671 per unit per year in 2024, according to the survey. That’s about 6% more than the average a year earlier.
The AHF 50 developers list is based on the number of new affordable housing units that a firm started construction on in 2024. Seven nonprofit and 44 for-profit companies make up the AHF 50. There are 51 companies because of one tie compared with 52 firms last year.
The AHF 50 owners list is determined by the number of affordable housing units owned by a company as of Jan. 1. This year, Starwood Capital climbs to the top spot with 52,844 affordable units, followed by The Michaels Organization with 51,720 units.
The top owners list includes 11 nonprofit and 39 for-profit companies.
