As we head into 2025, affordable housing continues to be one of the most pressing issues in the real estate industry. Rising construction costs, shifts in policies, and a growing demand for affordable units are making it harder to create and maintain affordable housing solutions. For real estate professionals, staying ahead of the curve is crucial. Whether you’re involved in development, financing, or property management, understanding the current landscape and adapting strategies is key to succeeding in this space.
In this post, we’ve compiled expert insights, real-world stories, and actionable tips to help you navigate the challenges and opportunities in affordable housing in 2025.
💡 Expert Insights on Affordable Housing
1. The Case for Housing Preservation: A Smart, Sustainable Strategy
Alice Carr, CEO of April Housing, explains the significant value of preserving existing affordable housing. “In 2024, we successfully preserved over 1,500 affordable units, and by 2025, we aim to become the largest preserver of affordable housing in the U.S.,” she says. “Preserving existing stock is often more cost-effective than building new units, and it helps maintain long-term stability for residents.”
Tactical Tip: For real estate professionals, preservation offers an immediate opportunity to mitigate housing shortages. Look into repurposing older buildings or partnering with local nonprofits to secure funding and support for these projects. Also, explore tax incentives and low-income housing credits to make preservation efforts more financially viable.
2. Zoning Reforms and Rent Control: Navigating Policy Changes
Daniel Bernstein, attorney at Rosenberg & Estis, emphasizes the importance of understanding local zoning reforms and how they can create opportunities for affordable housing development. “Programs like New York City’s ‘City of Yes’ are cutting through bureaucratic red tape and making it easier to develop affordable housing,” Bernstein explains. “These types of policy changes are popping up in cities across the country and can unlock development potential for affordable units.”
Tactical Tip: Stay informed about local zoning and land-use reforms that could impact affordable housing projects. Proactively engage with municipal planning departments to stay ahead of upcoming changes, especially those that offer incentives or reduce restrictions on development.
3. Overcoming Construction Challenges: Managing Costs and Financing
Paul Fiorilla, Director of Research at Yardi Matrix, offers a stark warning: “While affordable housing deliveries will peak in 2025, at 70,500 units, challenges like construction costs, labor shortages, and financing obstacles will likely slow down future growth in the sector.”
Tactical Tip: Given the rising construction costs and labor constraints, real estate professionals should consider alternative construction methods such as modular housing or prefabricated units. Also, explore Opportunity Zones, tax credits, and low-interest loans as ways to secure financing for your affordable housing projects.
🏠 Real-Life Example: Cedar Ridge Apartments — A Model for Preservation and Collaboration
In Northern California, Cedar Ridge Apartments faced the threat of being converted into market-rate housing due to rising property values and gentrification pressures. Instead, a unique collaboration between local nonprofits, the city, and private investors resulted in the preservation of the property as affordable housing. The renovated units were upgraded without raising rents, ensuring that current tenants could stay in their homes.
Tactical Takeaway: Collaboration between nonprofits, government agencies, and private developers is a powerful tool for preserving affordable housing. Look for opportunities to partner with local organizations to secure funding for preservation projects. This can not only safeguard affordable units but also ensure long-term community stability.
📊 Key Trends and Market Insights
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Affordable Housing Deliveries: The number of affordable housing units delivered in 2025 is expected to reach 70,500. However, this peak will be short-lived, as construction costs and labor shortages will likely cause a decline in deliveries in the years to follow. (Source)
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Zoning Reforms: New York City's City of Yes initiative is setting a precedent for easing zoning restrictions and encouraging affordable housing development through policy changes and incentives. Other cities are likely to follow suit, making it crucial for developers to stay informed. (Source)
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Preservation Efforts: Blackstone’s April Housing is on track to become the largest preserver of affordable housing in the U.S., with a goal to preserve 1,500 units by 2025. This reflects the growing trend of prioritizing preservation over new construction as a cost-effective solution to the affordable housing crisis. (Source)
❓ Frequently Asked Questions (FAQ)
Q1: Why is affordable housing preservation so critical?
A1: Preserving existing affordable housing helps avoid displacement of residents and ensures long-term community stability. It is often more cost-effective than constructing new units and supports neighborhood diversity.
Q2: How do zoning reforms affect affordable housing?
A2: Zoning reforms like New York City’s City of Yes reduce bureaucratic barriers, streamline the approval process for affordable housing projects, and offer incentives for developers to include affordable units. These reforms can significantly improve development timelines and reduce costs.
Q3: What challenges do developers face when building affordable housing?
A3: Rising construction costs, labor shortages, and difficulties with securing financing are some of the most significant hurdles. Developers must look for cost-effective building methods, explore financing options like Opportunity Zones, and stay informed about government incentives to mitigate these challenges.
Q4: What can real estate professionals do to stay competitive in affordable housing?
A4: Stay informed about local policy changes, financing options, and market trends. Collaborate with nonprofits, municipalities, and investors to access funding and support for affordable housing projects. Look for ways to innovate and overcome construction and financing challenges.
🚀 Call to Action: Get Involved — Shape the Future of Affordable Housing
The affordable housing sector is at a critical point of transformation. As a real estate professional, you can make a lasting impact by focusing on preservation, adapting to new policies, and embracing innovative strategies to overcome the obstacles in the market.
💥 Get involved today! Take action by learning more, collaborating with stakeholders, and exploring creative solutions to tackle the affordable housing crisis. Together, we can ensure that affordable housing remains a reality for all.
🌍 Join the movement! Share your ideas, make your voice heard, and contribute to the future of affordable housing.
📚 References
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April Housing’s Preservation Strategy: Blackstone’s April Housing is on track to become the largest preserver of affordable housing in the U.S., aiming to preserve over 1,500 units by 2025. Read more
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Affordable Housing Deliveries Forecast: Yardi Matrix projects a peak in affordable housing deliveries at 70,500 units in 2025, followed by a decline due to rising construction costs. Read more
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Zoning Reforms in NYC: The “City of Yes” plan aims to streamline zoning processes and encourage affordable housing development in New York City. Read more
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