There was no shortage of affordable housing news in 2024.
Cutting-edge developments opened their doors even as developers and owners faced rising costs. An array of housing-related legislation sought new solutions. Many communities enacted tougher laws on people struggling with homelessness. A new president and Congress were elected, raising questions about housing policies and programs in the years ahead.
Affordable Housing Finance asked several members of its editorial advisory board and other industry leaders to share what they thought was most significant for the sector.
“In 2024, the country finally turned its collective attention to housing affordability, an often overlooked systems issue,” says Paul Bernard, president and CEO of Affordable Homes & Communities (AHC), a leading nonprofit affordable housing developer and operator based in Virginia. “This issue became mainstream due to high inflation, the high cost of living for many working classes, and the severely limited supply of affordable housing options. Because of this, we saw significant prioritization of affordable housing across many regions.”
Others also cite the attention that affordable housing received from political candidates and its emergence as a kitchen-table issue this year.
“For the first time in recent history, affordable housing was a key component of both presidential candidates’ campaigns due to supply-demand challenges and growing concerns that the majority of Americans are housing cost-burdened,” agrees J. David Heller, president and CEO of The NRP Group, one of the nation’s most active and largest affordable housing firms. “It’s encouraging to see this critical issue take center stage for the new administration, highlighting the urgent need for solutions to the housing crisis nationwide.”
Deborah VanAmerongen, strategic policy adviser and deputy practice group leader for affordable housing and real estate at the Nixon Peabody law firm, also cites the focus that affordable housing has received as the most significant news of the past year.
“The issue of the lack of affordable housing throughout the country has never seen this level of prominence in a presidential campaign before,” she says. “While each candidate had different ideas about what is causing this crisis and also what tools will be necessary to address it, both devoted time to it on the campaign trail.”
Industry veteran Ronne Thielen, executive vice president and director of public policy and advocacy at R4 Capital, says the discussion of affordable housing in the news was at a level she’s never seen.
“My entire career has been about helping to increase the supply of affordable housing,” she says. “We who work in this industry have always recognized that housing for lower-income people has not kept up with the need. Now, it seems the recognition has grown exponentially. From my viewpoint working as a policy and advocacy person for R4 Capital and as a long-time Affordable Housing Tax Credit Coalition board member, this widespread acknowledgment is incredibly exciting. Our time has come.”
It's clear that rising development and operating costs remain major challenges, but the industry began to see some positive signs this year, according to finance executives.
“2024 followed the adage that ‘no news is good news,’” says Jim Gillespie, executive vice president at BWE, a national commercial and multifamily mortgage banking company. “After 2022 and 2023 saw consistent rate hikes from the Fed, this year we've seen rates hold steady and then start to decline, which has significantly increased the feasibility of new affordable deals. Construction and operating costs have also stabilized after increasing significantly during the COVID-19 pandemic, which has allowed developers to start new projects and bring more units online than in previous years. This return to normalcy after a few years of major disruptions in the real estate space has provided developers/owners with more predictability in evaluating a new project’s feasibility and managing their existing real estate portfolio.”
Barry Krinsky, national production manager at Citi Community Capital, notes that lower interest rates in 2024 compared with the prior year helped make more deals feasible combined with new sources of subordinate capital.
“Deal sizes continued to increase in line with development costs, which put additional stress on the equity investor marketplace,” he says. Krinsky also adds that it became common to have multiple investors in one deal.
The NRP Group’s Heller adds that the Fed did not deliver the larger interest rates cuts many people had expected.
“As of November, federal interest rates remained between 4.5% and 4.75%,” he says. “While this has helped prevent the economy from overheating, it has also created challenges for delivering affordable housing. Our industry is especially sensitive to interest rate changes, making these conditions particularly difficult to navigate.”
On the legislative front, the industry saw strong bipartisan support for the low-income housing tax credit in Congress but fell short of gaining a key expansion of the program this year.
In February, the House of Representatives passed a $78 billion tax bill that included key measures to boost the housing credit. However, the Senate rejected legislation that would have expanded the program this year.
“While the Wyden-Smith [tax] bill containing our LIHTC provisions was tabled until 2025, the industry achieved a huge milestone that has been years in the making,” says longtime industry leader Bob Moss, founding partner of MG Housing Strategies. “Over half of the House of Representatives co-sponsored H.R. 3238 and one third of the Senate co-sponsored the bill on a bipartisan basis.”
