Developers' Panic Deepening As Trump Guts Affordable Housing Programs

The Trump administration’s push to reduce spending is already having dramatic impacts on affordable housing developers across the country.

From executive orders targeting key sources of development funding to allowing some programs to run out of cash to dramatic staffing cuts, pressure points are building on the companies and organizations on the front lines of the housing crisis. 

“We use a mix of everything,” Desmonde Monroe, president and CEO of New York-based affordable developer The Monroe Group, told Bisnow. “If you take one away, it does hurt, because then we have to find that capital somewhere to close the gap.”

While some industry leaders have expressed confidence that long-established systems of checks and balances will prevent disastrous outcomes, many fear that the cumulative effect of the cost-cutting campaign will leave builders without enough funding to generate desperately needed affordable units.

“We're probably going to see a slowdown in financing of affordable housing,” said Rachel Fee, executive director of nonprofit advocacy group the New York Housing Conference. “We're worried about everything in housing. It seems like this effort to give government a smaller footprint — anything can be a target.”

Last week, President Donald Trump issued an executive order seeking to eliminate the Community Development Financial Institutions Fund “to the maximum extent” allowed by law, targeting a program considered fundamental to low-cost housing development and preservation, especially in overlooked communities.

The Trump administration has canceled millions of dollars worth of contracts with nonprofits that support low-cost housing development and is reportedly planning to cut the Department of Housing and Urban Development’s workforce in half.

Funding for a more than $1B program known as the Green and Resilient Retrofit Program, designed to help landlords make necessary renovations and upgrades to affordable housing units while preserving affordability for up to 25 years, was paused earlier this month.

HUD also told local public housing authorities that funding for the Emergency Housing Voucher program — which covers rent to landlords of the most vulnerable tenants, such as victims of domestic violence — will be cut off at the end of 2025, four years ahead of schedule. The move could leave thousands of Americans at risk of homelessness.

The cuts are coming as the nation already has a shortage of 7 million homes that are affordable to low-income renters — a gap now expected to widen in the coming years.

A HUD spokesperson said in a statement that the department is obeying the administration’s orders while staying true to its mission. The GRRP was part of an “extreme energy efficiency crusade” from the previous administration that diverted resources from HUD’s mission, the spokesperson said.

“The department is evaluating options to ensure rural, tribal and urban communities have the resources they need, which are not solar panels,” HUD's spokesperson told Bisnow in email.

The dramatic about-face in federal housing policy has pushed investors in the space — which include major banks, impact funds and institutional capital — to slow down their commitments to new projects.

“Uncertainty is the absolute worst thing for financing housing,” Fee said. “We can't expect lenders and investors to react the same way or make the same kind of business decisions they were making a few months ago.”  

Trump's order targeting the CDFI Fund, which has long-established bipartisan support, puts more than $300B of loans for commercial real estate projects and small businesses at risk. 

“You know you have those big boats, and then you have the tugboats that have come alongside them? CDFIs are the tugboats,” said Laurie Schoeman, a former White House senior housing and urban policy adviser. “They're not that shiny. They're kind of doing their thing. But they really provide a critical role." 

CDFIs are mission-driven lenders that make low-cost, long-term loans to borrowers who might be refused by traditional banks. There are more than 1,400 of them across the U.S., spread through 92% of the country’s 435 congressional districts and targeting niche groups, including veterans, Native Americans and seniors.

Banks, credit unions and venture capital funds can all be CDFIs, which are certified by a fund under the Treasury Department. More than 45,000 new housing units were funded by CDFIs in fiscal year 2024.

Over the past few years, the federal CDFI Fund has backed developers building senior housing in Maine and buying land for deeply affordable housing in southern Seattle. Developers have also used CDFI capital to turn run-down houses into livable homes in Kansas City and repair homes damaged during 2022’s deadly floods in southeastern Kentucky.

“They have been able to get bipartisan support because they are all over and they are serving those market niches that are not getting served by the mainstream financial services sector,” said Jeanine Jacokes, CEO of CDFI Partners for the Common Good and chief executive and policy officer of the Community Development Bankers Association.

Last week, a bipartisan group of two dozen senators penned a letter to Treasury Secretary Scott Bessent asking him to protect the CDFI Fund from deep cuts. Bessent has been exploring ways to protect the fund as he prepares to submit a response to the executive order, Bloomberg reported. 

Monroe, who is building subsidized housing in New York, New Orleans and Indianapolis, says CDFIs back the majority of his developments.

Without CDFIs, “there's no more affordable housing,” he said. “Then everybody has to build market-rate. That's it. Then there goes the middle class. Done. I mean, where are people going to live?”

The Trump administration has also canceled at least $60M in Section 4 contracts, which provided grants to affordable housing nonprofits. 

HUD’s pause on GRRP followed an order by Elon Musk's Department of Government Efficiency to cut the program, which Congress authorized in 2022. The program is still authorized until 2030, but the news left hundreds of projects in limbo as developers look for alternative funding sources and try to scrounge for answers, Bloomberg reported.

In Congress' stopgap funding bill, HUD is slated to receive a nearly $3.7B increase, but that would effectively cut subsidies and rent by more than $700M, according to the National Low Income Housing Coalition. Landlords would either have to take on more expenses or evict an estimated 32,000 households that rely on the voucher program.

Beyond the direct spending reductions, Trump's tax plan — replacing the soon-to-expire cuts established in his first term — could have consequences for the bedrock of affordable housing development funding nationwide.

Low-Income Housing Tax Credits subsidized the creation and preservation of roughly 3.7 million affordable housing units between 1987 and 2022. LIHTC is the largest federal program for the development and preservation of affordable housing, costing the government roughly $13.5B annually.

Each state gets a certain allocation of nonrefundable and transferable tax credits to developers to subsidize affordable housing construction and renovation. Developers can trade those credits to investors for project financing, and investors can then give the credits back to the government for tax breaks.

In recent years, housing advocates have pushed to expand the program, arguing that LIHTC is the only one that builds low-income housing at a “significant scale.”

“If the LIHTC program were also to have changes or not be supported, that would undermine the foundation of affordable housing finance in this country,” Jacokes said.

But if the tax rate goes down, the credits become less valuable. When Congress passed the 2017 Tax Cuts and Jobs Act, which slashed the corporate tax rate to current levels, the drop in affordable housing production over the next decade because of the cut was estimated at 235,000 units.

Trump has promised to cut the corporate tax rate from 21% to 15%, and a Republican-controlled Congress is inching closer to agreeing on a budget that would slash trillions of dollars in federal funding alongside the tax revenue reductions. 

“If there is the intent to reduce the corporate tax rate further, it will suppress LIHTC investors,” Fee said. “They're less interested in a tax credit if they have less tax obligation.” 

Related Beal Vice President of Affordable Acquisitions Nick Boehm said with uncertainty surrounding the program, his company is looking to sell off assets to finance and invest in new developments.

“We should not be considering [LIHTC] as a viable option for any type of transaction you're looking to do in the next three to four years if you're not honestly talking to someone about it now,” Boehm said at a Bisnow affordable housing event on March 13. “But even then, it's so uncertain about what deals will be funded, even if you have an award.”

While affordable housing developers and nonprofits are sounding the alarms, some national housing groups are emphasizing caution rather than predicting worst-case scenarios.

“A couple programs like GRRP have been canceled, but a lot is still hearsay, and we're trying to say, ‘Let's control what we can control, and take it as it comes,’” National Housing Trust CEO Priya Jayachandran said.

Jayachandran said Congress might expand some programs, including LIHTC, arguing that the bipartisan support they have historically received will play in their favor. But the NHT is still monitoring potential cuts to Community Development Block Grants and the HOME Investment Partnerships Program.

“It's not us against them,” Jayachandran said. “We all acknowledge that we need new and different solutions and welcome the administration's focus on trying to bring new tools to production and to easing regulatory burdens and increasing the pace of development, the speed. So all of those are welcome efforts.”

The Trump administration has eyed cutting down regulations that have burdened developers and finding opportunities on “underutilized” federal land that they say would unlock more housing to address the national shortage than programs focused on climate-friendly upgrades like the GRRP.

“Housing affordability is a top priority for the administration, as evidenced by the President Trump’s Day One executive order to lower the cost of housing,” HUD's spokesperson said. “HUD is committed to carrying out that executive order by taking action to reduce the cost and increase the supply of housing.” 

Pat Cave, senior vice president of policy at Enterprise Community Partners, expressed optimism that Congress could expand the New Markets Tax Credit and LIHTC and unlock other sources of funding. But in the short term, he acknowledged that development is slowing.

“The uncertainty is causing a great pause,” Cave said. “It's hard to fund a deal when your funding sources to the deal are changing.”