After a high-profile battle in both houses of Congress, Trump’s One Big Beautiful Bill Act (OBBA) will take effect starting in 2026. While the 900-page bill includes provisions aimed at boosting affordable housing, its overall impact on housing affordability for everyday Americans continues to be a subject of debate. Most likely, we will see a mix of outcomes as policies take effect and their impact plays out in the context of other economic and political factors.
Positive Impacts of OBBA
The bill expands the Low-Income Housing Tax Credit (LIHTC) through a permanent 12% increase in 9% LIHTC allocations and a reduction in the 50% bond financing threshold to 25% for properties placed in service after Dec. 31, 2025. These changes are projected to finance a considerable number of additional affordable homes across the country, with estimates indicating more than 1.2 million new units nationwide over the next 10 years, or approximately 120,000 per year. Texas, for example, is expected to gain 96,500 affordable homes over the next decade due to these changes. Some sources suggest this expansion to LIHTC is the most substantial in 25 years.
OBBA also extends and enhances the Opportunity Zone program, which provides tax benefits for investing in distressed communities. The goal is to stimulate investment and development, including affordable housing projects, in areas that need it most. The House and Senate versions included measures to target eligible census tracts to focus on lower-income and economically disadvantaged areas.
The New Markets Tax Credit (NMTC), established in 2020 and set to expire in 2025, is now permanent under OBBA. The NMTC was designed to stimulate private investment and economic growth in low-income urban neighborhoods and rural communities. According to the New Markets Tax Credit Coalition, NMTC has generated more than $143 billion in total capital investment through public-private partnerships and created more than 1.2 million jobs across the country.
Rural and tribal communities also benefit from the new legislation. OBBA includes provisions that favor affordable housing development in rural and tribal areas, such as a 30% basis boost for eligible projects, providing opportunities in regions where development can be more challenging.
Making the NMTC permanent and adding focus to rural and tribal communities increases the areas of impact and allows for a greater swath of the country to garner investment for much-needed affordability, with the hope of having an impact on large-scale community projects.
Debatable Outcomes of OBBA
OBBA is not without its critics, and there are concerns that certain OBBA provisions could negatively affect renters, particularly those with lower incomes. For instance, the bill aims to restrict cities and states from regulating algorithm-driven rent-setting or automated tenant screening processes, which, according to some research, may harm renters.
OBBA also eliminates several energy-efficient incentives and clean energy tax credits. Some analysts believe this could increase the cost of new homes and potentially lead builders to cancel projects, exacerbating the housing shortage. Climate change affects property performance, and energy efficiency is needed for rent/utility cost stabilization and grid impact. Some states may double down on their own incentives for awarding tax credits to deals that go above and beyond the standard scope.
Because it is projected to increase the federal deficit, OBBA may also indirectly affect housing affordability. An increased federal deficit can lead to higher interest rates, impacting long-term affordability for lower- and middle-income families.
Further, rollbacks of environmental regulations continue at the federal and state levels (vis-à-vis NEPA, CEQA, FFRMS, etc.), but as recent severe weather events indicate, people, property and communities as a whole remain susceptible to catastrophic losses.
So while federal and state governments look to cut red tape and promote development, insurance companies will likely look to safeguard against casualties and property losses by enforcing stricter guidance by way of higher rates for indemnity.
At Partner, we remain focused on assessing environmental and climate-related risk. Many of our clients are requesting Construction, Occupancy, Protection, and Exposure (COPE) data collection along with their Property Condition Assessments. COPE data is used by insurers to assess climate-related risk during insurance underwriting. This, along with Property Resilience Assessments, can support insurability and resiliency.
Striking a Balance
At the end of the day, our nation’s affordable housing crisis remains front and center, and OBBA certainly addresses barriers to financial feasibility and regulatory compliance that have historically stymied development. However, responsibility for safeguarding commercial real estate assets remains
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