July 31, 2025
According to the McKinsey Institute for Economic Mobility, more than 9 million housing units will be needed by 2035 to address the housing shortage.
It’s no secret that the United States is facing an affordable housing crisis, as the costs of living and inflation continue to rise. At the same time, wages barely move the needle to keep pace with increasing costs.
The average cost of a home in the United States is currently around $410,800. Using Bankrate’s mortgage calculator, Americans need to make between approximately $100,000 and $135,000 per year to own a home. Average salaries in the U.S., however, are roughly $39,982.
According to the McKinsey Institute for Economic Mobility, more than 9 million housing units will be needed by 2035 to address the housing shortage.
While the housing crisis is a national issue, it disproportionately burdens Black Americans. According to the institute, nearly 60% of Black renters and 30% of Black homeowners are moderately or severely cost-burdened, well above national averages. The reasons for this are the legacies of housing discrimination that are compounded by continued supply, demand, and geographic imbalances.
Why Real Estate Developers Are Now Optimistic About Building Affordable Housing
For the last several years, real estate developers have said it is too expensive to build quality, low-income housing, particularly in the form of apartments.
However, as CNBC reports, the tide may be shifting for developers following the passage of the tax and spending bill by Congress. The legislation expands the Low-Income Housing Tax Credit (LIHTC) by permanently increasing the 9% credit allocation to states to 12%. Developers sell these credits to help finance their projects with investors.
“It’s a big boost for the creation of more affordable housing,” Jonathan Rose, founder and CEO of the Jonathan Rose Companies, told the outlet. Jonathan Rose Companies is a real estate planning, development, and investment firm.
He adds, “This won’t solve the whole 10 million unit problem, but it’ll be a big help,” said Rose, adding that he sees a growing opportunity for investors in the space.”
The bill also lowers the financing requirements for developers. Affordable housing advocates applaud Congress for passing the bill. Proponents say the LIHTC is an effective tool for building and preserving affordable housing.
“The housing provisions included in this bill are the most consequential and positive housing legislation in decades,” David Dworkin, president and CEO of the National Housing Conference, said in a release. “Key provisions include an expansion of LIHTC, permanent preservation of the existing mortgage interest deduction, reinstatement of the mortgage insurance premium deduction, an expanded and permanent Opportunity Zones incentive, and permanent extension of the New Markets Tax Credit.”
He adds, “his 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.”
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