The year 2025 marked a pivotal moment for the affordable housing sector, with leaders reflecting on significant legislative changes and ongoing challenges.The most notable event was the signing of the One Big Beautiful Bill (OBBB) by President Donald Trump on July 4, which included crucial reforms to the low-income housing tax credit (LIHTC) program.This legislation is expected to finance an additional 1.22 million homes over the next decade, addressing the pressing housing crisis in the United States.
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housingfinance.comThe OBBB introduced a permanent 12% increase in housing allocations starting in 2026 and reduced the bond financing test from 50% to 25%.This change is anticipated to unlock new opportunities for affordable housing transactions, as many states had previously exhausted their volume cap.
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housingfinance.comDavid Heller, president and CEO of The NRP Group, emphasized that this expansion represents the most meaningful enhancement of the LIHTC program in decades, although he acknowledged that it would not fully resolve the national housing shortage.
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housingfinance.comDeborah VanAmerongen, a strategic policy adviser, highlighted the significance of lowering the bond test, which had constrained the tax-exempt bond/4% LIHTC program.This adjustment is expected to facilitate more affordable housing projects without increasing the overall volume cap.
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housingfinance.comJim Gillespie, executive vice president at BWE, noted that while the policy change has the potential to significantly boost affordable housing production, the transition has introduced complexities that require industry stakeholders to adapt their financing strategies.
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housingfinance.comIn addition to the OBBB, other developments in 2025 included state-level deregulation and zoning reforms aimed at simplifying the development process.States like Texas and Florida have made strides in reducing zoning restrictions, which could lead to more affordable housing opportunities.
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housingfinance.comHeller pointed out that these reforms represent a shift towards more efficient housing policies, making it easier to deliver affordable units.
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housingfinance.comHowever, the year was not without its challenges.The uncertainty surrounding federal appropriations and the potential government shutdown created distress regarding funding for HUD programs, particularly rental assistance.
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housingfinance.comVanAmerongen noted that while the crisis passed, funding constraints in the Section 8 voucher program continue to pose challenges for developers and housing advocates.
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housingfinance.comIn New York, legislative measures were also introduced to enhance access to affordable housing.The New York State Senate approved a package of bills aimed at supporting homeowners and renters, including a first home savings program for first-time buyers and free legal services for homeowners.
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nysenate.govSenate Majority Leader Andrea Stewart-Cousins emphasized the need for legislative action to protect tenants and expand housing opportunities for all New Yorkers.
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nysenate.govThe Housing Leadership Day event in San Mateo County brought together 230 housing advocates and community members to discuss innovative solutions for the housing crisis.This annual gathering has become a platform for collaboration and policy advancement, reinforcing the commitment to affordable housing for all income levels.
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hlcsmc.orgAs the year concluded, industry leaders expressed optimism about the future of affordable housing.Ronne Thielen, executive vice president at R4 Capital, noted the unprecedented recognition of the need for affordable housing across the country, which has led to significant legislative actions.
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housingfinance.comHowever, concerns about the recent movement towards rent control were raised, with Thielen warning that focusing solely on keeping rents low could jeopardize the financial feasibility of housing projects.
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housingfinance.comOverall, 2025 was a year of both progress and challenges for the affordable housing sector.While the expansion of the LIHTC program through the OBBB was a landmark achievement, ongoing issues such as funding uncertainties and the need for effective zoning reforms remain critical to ensuring that affordable housing is accessible to all.
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housingfinance.comAs stakeholders look ahead, the focus will be on leveraging the momentum gained in 2025 to continue addressing the housing crisis in the years to come.
