Jonathan Rose is the founder and CEO of Jonathan Rose Companies, a mission-driven real estate planning, development, and investment firm. Overall, he’s encouraged by the progress made in the affordable housing space lately. Yet the United States is currently facing a shortage of at least 10 million affordable housing units. Rose thinks that recently passed legislation will be crucial in addressing this crisis.
Luckily, the new tax and spending bill passed this spring included a permanent 12% increase in the allocation of 9% credits to states. This amendment, along with some changes to another developers’ tax credit, moves the program’s place to minimize barriers to qualification. It makes the overall financial picture much better for affordable housing projects. Rose admits that this piece of legislation will not cure the appropriations-induced housing deficit plaguing our nation. For him, this is a huge leap in the right direction.
“This is a tough time, I think. All of real estate is being challenged by higher interest rates and by higher construction costs, and by the way, the building department requirements and all the frictions that are making real estate difficult,” said Rose. He emphasized that despite these challenges, a growing interest in housing-related investments from family offices and foundations signals a potential shift towards more affordable housing initiatives.
According to David Dworkin, president and CEO of the National Housing Conference, “This legislation delivers a significant expansion of the credit by incorporating key elements of the Affordable Housing Credit Improvement Act, aimed at boosting the supply of rental homes across urban, rural and tribal communities.” He pointed out that these amendments are already on track to produce or preserve more than 1 million affordable rental units. This program will run from 2026-2035.
The new legislation brings opportunity and optimism to the discussion. It does not address the pressure posed by growing NIMBY (Not In My Backyard) sentiments. Many residents oppose affordable housing developments in their neighborhoods, often due to historical perceptions tied to poorly constructed units from previous decades. “One of the reasons why communities oppose affordable housing is because a lot of affordable housing – it was built in the ’60s, ’70s and early ’80s – was cheap and ugly, and I wouldn’t want it in my neighborhood either,” Rose explained.
The surging home values of the last half-decade have only added to these NIMBY inclinations. As wealthy communities grow more nimble in beating back new builds, the affordable housing equation gets harder to solve. Rose is convinced that smarter, more beautiful, greener development is a better antidote to such fear and epidemic separation. “We’re deeply committed to creating beautiful buildings,” he stated.
Even with federal rental assistance programs facing proposed cuts under the Trump administration, amounting to a $27 billion reduction, Rose remains hopeful. These new legislative changes open a door for far greater support for affordable housing developments. He noted that while obstacles remain, “There’s also a lot of support, and our job is to weave the pathway in between the complexities, the challenges and the opportunities and find the pathway through.”
Rose believes there’s a growing opportunity for investors ready to take a chance on affordable housing. As more people become aware of how living sustainably is the only way to live in the future, the need for affordable housing increases. He’s counting on this newfound interest driving increasingly profitable investments in the relatively small sector in coming years.
As these discussions evolve, Rose encourages all involved in real estate development to consider the broader implications of their projects. The demand for affordable housing is urgent and growing, to say the least. Challenges remain, especially with unfavorable market conditions and NIMBYism. Recent state legislative changes go beyond that to demonstrate a clear and resounding commitment to addressing this national crisis.