Affordable housing developers kept the shovels turning despite rising development costs and other challenges in 2019. This year’s AHF 50 developers started construction on 290 developments with 33,073 affordable housing units last year, surpassing the previous year’s group, which broke ground on 257 developments with just over 32,000 units in 2018.

LDG Development tops the AHF 50 after starting construction on 2,355 affordable housing units across 11 different properties last year. It was the only firm to break the 2,000-unit mark in 2019, compared with three developers having done so in 2018. The Louisville, Ky.–based developer hopes to do even more this year, projecting to start construction on 15 new properties. While fewer firms surpassed the 2,000-unit level in 2019, the top nine firms all reported starting more than 1,000 units, compared with seven firms who accomplished the same in 2018.

The only list of its kind in the affordable housing industry, the 2020 AHF 50 Developers list is based on the number of units the firms started construction on in 2019. There are 52 firms on the list due to two ties, which was the case last year as well.

The strong activity was likely boosted by favorable financial conditions. The low-income housing tax credit and debt markets remained steady throughout last year after recovering from the upheaval brought on by the uncertainty of tax reform in 2017 and early 2018. What’s more, 56% of the developers taking part in AHF’s January survey expect finance conditions to remain steady through the end of this year, while 28% predict conditions to get better and the remaining 16% expect it to get worse.

However, other problems could slow down momentum. The rising cost of development easily tops the list of concerns for 2020, according to our survey, which reveals that developers spent an average of $307,871 per unit in their new-construction projects in 2019. That’s a 1.7% increase from the $302,862 average development cost reported the prior year.

“Rising costs of construction, growing need, and increasing homelessness are exasperating the lack of adequate, quality affordable housing supply across the U.S.,” says Jane Graf, who is retiring as president and CEO of Mercy Housing this year. “The funding from the federal level simply isn’t there for the country to adequately maintain and preserve the current supply either. This is forcing many cities and states to take bold action, so there is some optimism that current conditions could lead to impactful innovation that will affect the lack of affordable housing in the long term.”

Looking ahead to the rest of the year, the elimination or reduction of state and local resources and the availability and cost of debt financing are the next biggest concerns. An increase in the negative perception of affordable housing, including development costs, is also creeping up on the list of worries.

This year’s presidential election and Community Reinvestment Act reform could also impact the financial markets and mean changes to housing policy. The COVID-19 crisis emerged after the survey, but it's certain to be a major concern for the affordable housing industry.

The Michaels Organization continues to lead the AHF 50 Owners with 45,682 affordable units in 378 properties. This list is based on the number of affordable housing units owned by a firm as of Jan. 1, 2020.

Capital Realty Group tops the Top 10 list of firms completing acquisitions, and Dominium heads the Top 10 firms completing substantial rehabs, at least $20,000 per unit, last year.