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A Multi-Perspective View on Upcoming Affordable Housing Changes

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As we gather at AHF Live 2024 in Chicago, the affordable housing sector stands at a pivotal juncture. The recent election of Donald Trump for a second term brings a renewed focus on housing policies that will significantly influence investors, syndicators, and developers. This year’s conference agenda offers timely insights into navigating the evolving landscape.

Investor’s Perspective: Navigating Economic Policies and Market Dynamics

Investors in affordable housing are closely monitoring the economic policies of the incoming administration. President Trump’s proposed tax cuts and deregulation efforts aim to stimulate economic growth, which could lead to increased investment opportunities. However, these policies may also contribute to higher inflation and elevated mortgage rates, potentially impacting the affordability of housing projects. The National Association of Realtors estimates that the average rate on a 30-year mortgage will fluctuate between 5.5% and 6.5% during Trump’s second term.

At AHF Live 2024, sessions such as “Finance: Bond Financing Update” provide investors with strategies to mitigate interest rate risks and explore alternative financing mechanisms. Understanding these financial instruments is crucial for maintaining the viability of affordable housing investments in a potentially volatile economic environment.

Syndicator’s Perspective: Adapting to Policy Shifts and Funding Mechanisms

Syndicators play a vital role in structuring deals and securing capital for affordable housing projects. The Trump administration’s emphasis on deregulation and potential modifications to housing programs necessitate a proactive approach to deal structuring. The “Nuts and Bolts of Deal Structuring” workshop at AHF Live 2024 offers valuable insights into adapting to these policy shifts.

Additionally, the administration’s plans to utilize federal land for housing development present new opportunities and challenges. Syndicators must assess the feasibility of projects on federal land, considering factors such as location, infrastructure, and regulatory compliance. Engaging with sessions like “Developers’ Roundtable: Opportunities and Challenges” can provide syndicators with diverse perspectives on capitalizing on these emerging opportunities.

Developer’s Perspective: Embracing Innovation and Regulatory Changes

Developers are at the forefront of implementing affordable housing initiatives. The administration’s focus on reducing regulatory barriers aligns with developers’ goals of streamlining project approvals and reducing costs. However, the potential rollback of programs like Affirmatively Furthering Fair Housing (AFFH) may impact funding and compliance requirements.

AHF Live 2024 addresses these concerns through sessions such as “What’s Ahead at HUD,” offering developers insights into anticipated policy changes and their implications. Furthermore, the conference’s emphasis on innovation is evident in sessions like “Cutting-Edge Innovations in Affordable Housing,” encouraging developers to adopt new technologies and methodologies to enhance project efficiency and sustainability.

Conclusion

The intersection of policy changes and market dynamics under Donald Trump’s second term presents both challenges and opportunities for stakeholders in the affordable housing sector. AHF Live 2024 serves as a crucial platform for investors, syndicators, and developers to gain insights, share strategies, and collaborate on solutions to advance affordable housing development in this evolving landscape.

2024 Election Outcome and the Impact on Affordable Housing

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The outcome of the 2024 U.S. presidential election will profoundly shape the affordable housing industry due to the contrasting priorities of the leading candidates. With rising home prices, rental costs, and a significant housing supply shortfall, housing affordability remains a key issue. Depending on who wins, the approach to addressing these issues will vary significantly and will influence federal funding, regulatory frameworks, and market incentives.

Democratic Approach (Kamala Harris)

If Kamala Harris and the Democrats win, their policies are expected to prioritize expanding affordable housing through a variety of measures:

  • Housing Supply: Harris has pledged to build 3 million new housing units over the next four years, along with expanding the Low-Income Housing Tax Credit (LIHTC) to support affordable housing development. She also proposes a $40 billion fund to help local governments tackle housing shortages by addressing supply constraints and speeding up permitting processes. ​(RISMedia)
  • ​Homeownership: The Democrats are focusing on supporting first-time homebuyers through measures like a $25,000 down-payment assistance program and a $10,000 tax credit for first-time buyers​. (National Association of Home Builders)
  • Rental Market Regulation: Harris has proposed a nationwide cap on rent increases at 5% for corporate landlords and aims to ban algorithm-driven rent setting, which many believe leads to inflated rents.​ (National Mortgage News)

Republican Approach (Donald Trump)

A Republican victory, with Donald Trump and running mate J.D. Vance, would emphasize reducing regulations and encouraging private-sector solutions:

  • Regulatory Reductions: Trump has promised to cut what he sees as unnecessary regulations that raise construction costs. His administration would also aim to open portions of federal land for affordable housing development​.
  • Homeownership: Like Harris, Trump supports homeownership, but through tax incentives and by reducing inflation to lower mortgage rates. His focus is on easing market pressures by rolling back government interventions.​ (National Association of Home Builders)
  • Immigration and Housing Costs: Vance has argued that immigration policies have worsened housing affordability by increasing demand for homes in lower-income neighborhoods, making homeownership more difficult for U.S. citizens.​ (RISMedia)

If Democrats win, we could see a large-scale investment in new affordable housing units, increased support for first-time homebuyers, and stricter regulations on corporate landlords. These efforts would likely help lower housing costs and expand access to affordable housing. However, if Republicans win, the focus would likely shift toward deregulation, reducing federal involvement, and fostering private-sector solutions to increase housing supply. While this may lower costs for developers, it may not directly address affordability for low- and middle-income families as effectively.

Jennifer Schwartz, Director of Tax and Housing Advocacy at the National Council of State Housing Agencies (NCSHA), will be giving a keynote presentation during our annual virtual user conference, ProLink Technology Live 2024, next Monday at 11 a.m. EST. She will be addressing this matter as well and may have differing opinions on what we have provided above. If you would like to learn more and register for our conference, you can click here.