Impact Growth Fund

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3 Key Takeaways
1. A Major Policy Pivot Is Underway
HUD’s proposed overhaul could redirect up to 66% of current permanent housing funds toward short-term aid and enforcement. This marks the largest shift in homelessness strategy in more than a decade.

2. Systemwide Disruption Is Likely
With the CoC (HUD’s Continuum of Care program) program supporting 8,000+ projects, states warn the rule change could destabilize permanent supportive housing and put up to 170,000 people at risk of displacement.

3. Affordable Rentals Will Absorb the Shock
If permanent housing dollars shrink, pressure shifts directly onto NOAH (Naturally Occurring Affordable Housing) and workforce units increasing demand, boosting occupancy stability, and tightening supply even further.

Housing Policy
The Policy Fight That Could Reshape America’s Homelessness Strategy

How a federal funding overhaul could disrupt housing-first systems and increase pressure on affordable rentals

A major shift is underway and most people aren’t hearing about it.
The Trump administration has proposed sweeping changes to the $3.9B HUD Continuum of Care (CoC) program, the backbone of federal homelessness funding. The new rules would pivot from long-standing housing-first models toward short-term treatment, work requirements, and encampment enforcement.

States are pushing back hard.
A coalition of 19 attorneys general, plus governors from Maryland and Massachusetts, filed suit arguing the changes unlawfully alter how Congress intended homelessness dollars to be used. The CoC currently supports 8,000+ projects nationwide, serving elderly, disabled, and chronically unhoused populations.

Why This Matters

How a federal funding overhaul could disrupt housing-first systems and increase pressure on affordable rentals

1. Permanent housing funding may fall by up to 66%.

Redirecting billions away from permanent supportive housing could destabilize as many as 170,000 people, pushing many into already strained rental markets.
IGC lens: Increased displacement amplifies demand for affordable and workforce rentals, especially NOAH. Our partnerships with nonprofits and employment services along with the resident software suite that connects households to critical resources become more essential than ever.

2. Demand pressure will intensify in already supply-constrained markets.

If supportive housing contracts, renters move down-market into lower-tier, lower-rent inventory.
High demand + fixed supply = tighter occupancy and more durable rent floors.

3. Homelessness trends will shape local policy and new incentives.

As homelessness rises, cities are likely to expand vouchers, subsidies, and public–private partnerships to stabilize housing rapidly.
These mechanisms often reinforce and strengthen NOAH performance.

4. The court ruling will determine the national direction.

The case now heads to the U.S. District Court in Rhode Island. An injunction could freeze the overhaul; an approval could accelerate it nationwide.
Either way, pressure on affordability, stabilization, and service-enriched housing is only going to grow.

What This Means for Investors

Affordable and workforce housing especially NOAH stands to remain one of the most resilient, needs-based asset classes for the next decade.

Here’s why:

• Demand rises in both strong and weak markets. Displacement always pushes households toward attainable rents.

• Occupancy stabilizes. When supportive housing is cut, NOAH often becomes the next stop, not the last.

• Policy tailwinds strengthen returns. Expect more local vouchers, grants, and tax-based incentives as cities respond to rising homelessness.

• Long-term fundamentals improve. Structural undersupply and widening cost burdens support durable pricing power.

This isn’t cyclical it’s structural.

IGC’s Perspective

At Impact Growth Capital, we expect the next decade of housing policy to be shaped by:

• Rising cost burdens across income tiers

• Increasing reliance on private operators to fill federal gaps

• Growing demand for stabilized, service-aware workforce housing

• Public–private partnerships expanding faster than new construction

Affordable housing especially NOAH sits at the center of these shifts.
It delivers stable performance across cycles, meets a critical societal need, and aligns with demographic and policy realities.

This is where we’re focused.
This is where long-term opportunity lives.

The Impact

The proposed policy shift could accelerate demand for affordable rentals in already supply-constrained markets. Cities experiencing rising homelessness may expand vouchers, subsidies, and public–private partnerships to fill gaps left by federal cuts.
For investors, this creates a paradox: higher risk for vulnerable populations, but stronger defensive positioning for workforce housing portfolios. NOAH becomes even more essential infrastructure the only remaining affordable option for many displaced households.

What’s Ahead

The lawsuit now moves to the U.S. District Court in Rhode Island, where states seek an injunction to block the new rules before they take effect.
Regardless of the ruling, the broader direction is clear:

• Affordable housing demand is structurally increasing

• Federal policy is becoming more volatile

• Cities will lean more heavily on private operators to stabilize housing

• NOAH and workforce housing will remain among the most resilient, high-need asset classes for the next decade

This moment isn’t just a policy dispute it’s a signal of where the national housing landscape is heading.

If you want, I can package all three sections into a full, polished newsletter block with a headline and intro.

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