Affordable Housing: A Growing Challenge and New Opportunities for Investors

Posted on August 26, 2025

The affordable housing crisis in the U.S. keeps getting worse. Whether in the rental or for-sale market, there just isn’t enough supply. Developers say it’s too costly to build quality, low-income housing today. Rising land, labor, and material costs—along with restrictive zoning laws and “not in my backyard” pushback—make new construction harder.

Jonathan Rose, CEO of the Jonathan Rose Companies, says the entire real estate industry is being squeezed by higher interest rates, construction expenses, and complex building regulations. But he also sees opportunity: “Our job is to weave through the challenges and find the path forward.”

A Boost From Tax Credits

The recently passed tax and spending bill expanded the Low-Income Housing Tax Credit (LIHTC). States will now get 12% more credits to allocate, which developers can sell to investors to help finance projects. Advocates call this the nation’s most effective tool for creating affordable rental housing. Experts estimate the changes could produce or preserve more than 1 million affordable rental homes between 2026 and 2035.

Investor Interest on the Rise

The Jonathan Rose Company recently raised a $660 million impact fund to acquire and enhance affordable and mixed-income housing in major U.S. cities. Family offices, foundations, and institutional investors are showing growing interest in this space.

Political Uncertainty

One challenge ahead: the Trump administration has proposed cutting $27 billion from federal rental assistance. While Congress may not approve this, even the suggestion has already made some lenders cautious. At the same time, the Senate is considering bipartisan legislation to expand overall housing supply by reducing regulatory barriers and supporting local infrastructure.

The NIMBY Challenge

Even with new incentives, local resistance remains. Many communities oppose affordable housing, often fearing it will hurt property values. Rose points out that older, poorly built housing gave affordable projects a bad name. Today’s mixed-income developments, however, are designed to be greener, higher-quality, and more cost-efficient.

The Bottom Line

The U.S. is short about 10 million affordable units. Expanded tax credits won’t solve everything, but they create major opportunities for investors while helping meet a critical national need. As Rose says, the goal is not just to build housing—but to build beautiful, lasting communities.

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