With a year that started with January’s California wildfires and then saw a lot of uncertainty on various sources of funding for affordable housing and community development in general, comes the emergence of a stronger, even more dynamic affordable housing sector.
But to get there, affordable housing leaders must confront a crisis that will severely test their courage and resolve.
That’s the viewpoint of Cecile Chalifour, head of Community Development Real Estate West region for J.P. Morgan. Her team has contributed to the development and revitalization of over 5,000 affordable housing units across the Western region over the last two years. Today she is a respected voice in the ongoing discussion that’s helping reshape the region’s housing future.
Chalifour recently shared her assessment and forecast:
How would you characterize the West region’s housing challenges today?
It’s a difficult situation. The fires brought attention to the limited availability of affordable housing. I live close to Altadena, one of the worst hit areas. Many families were underinsured. So, the idea of rebuilding, especially in today’s high-interest rate environment, isn’t realistic for many. Result? People move away. The priority has been, and should be, to help as many people as possible to hold onto their land. The risk is losing the fabric of our communities and that is hugely painful for people who just lost everything.
How are affordable housing developers coping?
It’s not easy. With so many single-family homes destroyed, the focus has not been on multifamily. In fact, words like “density” and “rental” can trigger hostile reactions from many in the impacted areas. It’s a very complex situation, considering that there were indeed a fair amount of low income tenants living in those communities, especially in Altadena. Affordable housing developers are aiming to be thoughtful, respectful of the communities, as they consider options to address the needs of low income families in those neighborhood. Plus, many affordable housing developers are already under tremendous pressure to better manage their existing affordable portfolio. Staggering increases in insurance, payroll, utilities costs, along with low rent and income restrictions on old LIHTC properties take a toll. Add increases in construction costs and funding uncertainty from state and federal sources, which impact the pipeline of new deals and developer fee, and affordable housing developers are left with extremely difficult decisions.
What kind of decisions?
Decisions around the long-term viability of their properties and their organizations, their core mission. Let me give you an example. Some development groups face significant financial losses. Sometimes we leave conversations concerned by the indecision and reluctance to make tough choices. Others, while facing multi-million-dollar write-offs on projects, come forward with a solid plan that includes hard decisions on programs, evictions, property dispositions. They have a strong leadership and board (for non-profits), willing to step up and double-down on very active asset management. They’re united in their resolve to overcome a difficult time, which we support. There’s no magic wand. Just the courage and determination to endure.
How do you see the path ahead?
Personally, I see little changing in 2026. Conditions here remain volatile, with budget uncertainty at all levels of government. I am more hopeful about 2027 and 2028. We’re in a transition phase. The good news is, in addition to the change to the 50% test on tax exempt bonds that is already bringing a breath of fresh air, affordable housing developers are developing new asset management tools and shifting their ways to operate properties, and various stakeholders are finally making moves in creating new tools and adapting some rules, after we all raised the alarm bell on LIHTC Preservation over the last few years. A new, more vibrant housing paradigm is shaping up for 2027 and beyond.
How can a bank like yours help?
I see us as thought leaders in helping support a community-wide conversation. J.P. Morgan fosters collaboration, even in tough scenarios. This is all about sustaining the long-term viability of affordable housing. How do we grow from this difficult experience and make tomorrow better? We’re all learning from the recent challenges that exacerbate the long term affordable housing crisis. Recent affordable and workforce housing deal closings in Los Angeles, Santa Cruz, Escondido and San Diego are a sign of the beginnings of our community’s rebuild.
What gives you hope?
This is an industry blessed with many brilliant, mission-driven minds. I have enormous confidence in our partners’ ability to endure. We will emerge stronger, even more resilient. This is not an industry that accepts defeat, it never stops dreaming and succeeding!
To learn more, get in touch with the J.P. Morgan Community Development Banking team.