affordable housing outlook in 2025

For a long time, the supply of affordable housing for low-income persons has faced a massive shortage which has only worsened in recent years. In 2024, the United States had a shortage of 7.3 million affordable rental homes for low-income renters.

According to Yardi Matrix’s Affordable Housing database, year-end, deliveries of fully affordable housing in the United States are expected to reach 69,600 units and then hit a multi-year peak of 70,500 units in 2025, before dropping significantly in future years.

In 2024, for the first time in recent history of presidential elections, the housing affordability emerged as a key issue with both the Democratic and Republican candidates discussing their plans to alleviate the housing crisis.

As we embark on the 2025 with a new President, it is important that the new administration deliver on their promise and address the housing shortage with long-term federal commitment.This means substantial investment in new affordable housing, the preservation of current affordable rental units, and practical measures to bridge the gap between incomes and rents. Although Affordable housing will and always be a collaborative effort between private and public funding sources, it is critical that President Trump deliver to support the affordable housing sector.

Two things to that will play a pivotal role in the direction of the affordable housing industry  in 2025 are is the expiration of the 2017 Tax Cuts and Jobs acts and the rumoured expansion of the LIHTC program. Both changes could lead to a notable impact on future pricing and volume of deals.

According to Debra Guerrero, senior vice president of strategic partnerships and government affairs at The NRP Group, “One of the most significant policy discussions that will affect affordable housing financing next year is the expiration of the 2017 Tax Cuts and Jobs Act, particularly the corporate tax rate.This could significantly impact affordable housing deals and influence financial partners’ investments, making it a key issue to monitor in the financial landscape.” Legislative action is anticipated and could lead to a change in the corporate tax rate and a resulting change in the demand for tax credits.

On the other hand, the expansion of the LIHTC Program could lead to an increase in supply of affordable housing supply.

Whichever way you look at it 2025 is shaping up tot be the “World Series of Tax Credits.”