Every year brings new opportunities and obstacles for the affordable housing industry.
Affordable Housing Finance asked several members of its editorial advisory board and other key leaders to share what they think will be the biggest challenge for the sector in 2025.
Ronne Thielen, executive vice president and director of public policy and advocacy, R4 Capital: “Our challenge is to keep up the momentum, the recognition of the need for much more affordable housing, so we can achieve enactment of federal legislation to expand the low-income housing tax credit (LIHTC) program and Department of Housing and Urban Development programs that work in conjunction with it. We need a much higher allocation of the 9% housing credit and the reduction of the private-activity tax-exempt bond test, among other improvements, so we can significantly increase the number of affordable rental homes that can be produced going forward. The Affordable Housing Tax Credit Coalition recently published an analysis that shows that rents for housing credit homes, on average, are 38% lower than market rate (averaging $653 per month) and as much as 50% lower in large cities around the country. This program does what it’s supposed to do.”
Bob Moss, founding partner, MG Housing Strategies: “Ensuring that we push for housing with LIHTC in the expected 2025 tax bill and continuing our education efforts with new congressional members. We will have LIHTC champions in some very key leadership positions.”
J. David Heller, president and CEO, The NRP Group: “With President-elect Donald Trump set to take office next year alongside a Republican-controlled Senate and House, 2025 presents a potential opportunity for significant legislation and streamlined regulations, highlighting the critical need for affordable housing. However, there’s uncertainty about how his administration’s policies will address affordable housing specifically. While Trump has emphasized reducing taxes as a priority, lower taxes could lead to reduced tax credit equity, posing a major risk for funding affordable housing projects.
This uncertainty introduces volatility, which is challenging for the real estate industry as a whole. While Trump is business-oriented and broadly supportive of housing, the question remains whether his policies will align with the needs of the affordable housing sector. The real challenge lies in this interim period of uncertainty, as clarity will likely emerge only after his first 90 days in office.”
Paul Bernard, president and CEO, Affordable Homes & Communities: “The industry may experience a series of competing challenges in 2025: (1) The integrity of the LIHTC program with respect to an adequate number of credits to support growth as well as the pricing of those credits to fund development cost; and (2) while short-term rates may be favorable for bridge and construction lending, we see long-term rates rising for permanent financing, making affordable housing development more expensive to fund and operate.”
Deborah VanAmerongen, strategic policy adviser and deputy practice group leader of affordable housing and real estate, Nixon Peabody: “While we are seeing a high level of concern and a great deal of attention focused on the housing affordability crisis, the industry faces a major challenge in converting the attention and anxiety into tangible measures that produce results to address the crisis. The incoming president seems singularly focused on issues around homeownership, and while there is no question those issues are important, the affordable housing community must also push for resources to develop and preserve affordable multifamily rental housing. The president-elect has made clear his desire for broad regulatory relief. In turn, affordable housing industry stakeholders will need to help ensure the administration focuses on regulatory relief that will benefit affordable housing production and preservation.”
Barry Krinsky, national production manager, Citi Community Capital: “Given larger deals, and competitive avenues for investors to purchase tax credits outside of housing, it will be challenging to find LIHTC investors to fund all of the deals in the pipeline. And, larger deal sizes generally equate to larger loans, which will lead to some borrowers hitting loan limits that will in turn make it more challenging to obtain construction loans.”
Jim Gillespie, executive vice president, BWE: “Practically every new affordable housing project requires some form of third-party subsidy, yet they remain scarce and unpredictable. The subsidies that have been available to fill gaps on many deals over the past few years may not be as abundant going into 2025. However, given the increased awareness of the need for affordable housing across the U.S., we are seeing new sources and programs being developed through state and local governments as well as the private sector.”
