09-07-2025
A big, beautiful affordable housing boom?
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Quick Fix
Everyone agrees that the U.S. lacks affordable housing. An underreported component of President Donald Trump's 'big, beautiful bill' might actually do something about it.
The bill's sweeping changes to arcane sections of the tax code could boost the supply of affordable rental units by as many as 1.2 million over the next decade. The adjustments to financing requirements for low-income housing tax credits, along with a higher allocations of tax breaks available for new projects, represent 'the single largest increase in affordable housing development resources in at least 25 years,' said Peter Lawrence, the chief public policy officer at Novogradac — an accounting firm whose analysis of the legislation has been widely cited by housing advocates.
Those tax credits serve as the 'premier source of capital for affordable housing supply,' he added (roughly 3.7 million housing units have qualified since 1987). 'There's nothing else that comes close in importance to it.'
The U.S.'s housing shortage was a major factor in post-pandemic inflation, and its political salience has only grown since Trump returned to office. New York City mayoral candidate Zohran Mamdani seized headlines with pledges to freeze rents, but his housing platform includes plans to expand state and municipal bonding capacity to boost the supply of affordable units. Rep. Mikie Sherrill, now the Democratic Party's gubernatorial nominee in New Jersey, also treated housing costs as a central theme of her primary campaign and pledged to improve the state's housing stock by making loans and tax credits more readily available.
Under the GOP's tax and spending law, developers of low-income housing would only have to finance 25 percent of their building and land costs through a special type of municipal bond — known as private activity bonds, or PABs — to qualify for a widely utilized tax credit. The volume of PAB financing available for those projects is capped and, under the previous regime, developers had to obtain 50 percent PAB financing before they could take full advantage of the credit.
By cutting the threshold in half, 'you can do the same amount of housing [development] with half the bonds,' said Emily Cadik, the chief executive officer of the Affordable Housing Tax Credit Coalition. The shift gives states the ability to move ahead with 'twice as much affordable housing with the existing bond cap.'
The tax credit provisions that were included in the GOP's megabill derive from a bipartisan measure that has been kicking around Congress for nearly a decade. The Affordable Housing Credit Improvement Act, whose current lead sponsors are Rep. Darin LaHood (R-Ill.) and Sen. Todd Young (R-Indiana), has enjoyed broad bipartisan support for years. Sen. Maria Cantwell (D-Wash.) has been a major force for the legislation since introducing its first iteration in 2016.
New York Housing Conference Executive Director Rachel Fee — whose nonprofit group has been critical of Trump's broader housing agenda — applauded the megabill's expansion of low-income housing tax credits for being long overdue.
'It will be a huge boost,' she said. 'It'll get shovels in the ground more quickly and produce affordable housing that low-income renters need.'
That's obviously welcome news for banks or real estate firms looking to invest in new construction (to say nothing of pro-growth cheerleaders on Trump's economic team).
But Fee included several caveats in her praise.
The White House's budget proposal would slash tens of billions of dollars from rental assistance programs — which underpin low-income tenant payments to landlords— and eliminate popular programs that support the development of affordable housing. Other cuts to the social safety net, including reductions in Medicaid and food stamp programs, also pose a threat to household finances of low-income tenants.
'Even just the budget proposal being out there is starting to make the lenders in this space nervous,' said Fee. The threat of those cuts 'make it more difficult to maximize the benefits of this low-income housing tax credit expansion.'
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Driving the Day
Senate Banking holds a hearing on digital asset markets at 10 a.m. with testimony from Blockchain Association CEO and former CFTC Commissioner Summer Mersinger, Chainalysis CEO Jonathan Levin, Paradigm General Partner Dan Robinson, Ripple CEO Brad Garlinghouse, former CFTC Chairman Timothy Massad and University of Minnesota Law School Professor Richard Painter, the former Associate Counsel to the president and chief White House ethics lawyer … The Chamber of Commerce holds a virtual discussion on 'Trade Wars and the Cost of Doing Business' at 1 p.m. … The Federal Reserve meeting minutes for June will be released at 2 p.m. …
Vigilantes? What vigilantes? — From Benjamin Guggenheim: 'As congressional Republicans advanced their megabill in recent months, many fiscal hawks in the party figured they had a powerful force on their side: wary titans of finance who had started sending powerful signals that their appetite for purchasing U.S. debt was not, in fact, endless. Turns out Wall Street was barely a bump in the road.'
You didn't hear? It's a trade news cycle now — Trump insisted that he won't punt on his new Aug. 1 tariff deadline, per Nicole Markus. 'There has been no change to this date, and there will be no change,' Trump posted on Truth Social. 'In other words, all money will be due and payable starting AUGUST 1, 2025 - No extensions will be granted.'
— He also said he would impose 50 percent levies on imported copper – which sent prices of the commodity soaring — and indicated that 'he could offer pharmaceutical manufacturers at least a year before applying a crippling 200% tariff on their foreign-made products,' per Bloomberg's Joe Deaux and Stephanie Lai.
— Richard Saynor, CEO of the Swiss generic pharma giant Sandoz, told POLITICO's Mari Eccles that 'a stick is not going to encourage us to make significant capital investment into a market which is unsustainable.'
This will show up labor market data — From Josh Gerstein and Hassan Ali Kanu: 'The Trump administration can move forward with plans to fire tens of thousands of workers across the federal government, the Supreme Court ruled Tuesday.'
The Economy
A new talking point — Council of Economic Advisers Chair Stephen Miran has a new report spotlighting how inflation on consumer goods has fallen — including for imports — even in the face of Trump's tariff regime. Trump seized on the research as proof that tariffs 'are making our Country 'BOOM,'' as he put it on Truth Social, and said, 'Someone should show this new Study to 'Too Late' Jerome Powell.' (Many economists still expect tariff-related inflation to appear in the consumer price index and personal consumption expenditures index later this summer.)
Speaking of Powell…
— The president told reporters that the Fed chair 'should 'resign immediately'' if Federal Housing Finance Agency Director Bill Pulte's claim that Powell misled lawmakers about renovations at the central bank's headquarters is proven correct.
More big news on housing — FICO officially has a competitor. The FHFA signed off on rule changes that allow lenders to choose to use the VantageScore 4.0 model or Fair Isaac Corp.'s credit score when originating loans backed by Fannie Mae and Freddie Mac, The WSJ's Imani Moise and Katherine Hamilton report.
Feeling the heat — Employers are struggling to fill positions that had been staffed by immigrants, reports Aaron Pellish. Agriculture Secretary Brooke Rollins said those roles can be filled by adult Medicaid participants who will soon face stricter work requirements under the GOP megabill. 'The mass deportations continue, but in a strategic way, and we move the workforce towards automation and 100 percent American participation,' she said.
Crypto
Another big crypto hearing — At today's Senate Banking hearing, Ripple CEO Brad Garlinghouse will encourage lawmakers to 'set clear jurisdictional boundaries for our main financial regulators,' according to a copy of his testimony shared with MM.
— New York Attorney General Tish James – who previously cautioned that the Senate's stablecoin legislation lacked adequate guardrails — will provide written testimony urging lawmakers to include language that would block retirement accounts from investing in digital assets. She'll also call for controls to ensure stablecoins are on-shored.
Jobs report
David Saltiel, former acting director of the SEC's trading and markets division, has joined the parent company of the Texas Stock Exchange as senior managing director of firmwide strategy.
The American Securities Association has promoted Kelli McMorrow to chief advocacy officer and Jessica Giroux to chief legal officer. McMorrow previously worked as the group's head of government affairs, while Giroux was general counsel. — Declan Harty
Nice work if you can get it — Former U.K. Prime Minister Rishi Sunak has rejoined Goldman Sachs as a senior adviser, report Bloomberg's Todd Gillespie and Alex Morales.
