Impact Growth Capital Newsletter

Impact Growth Capital

Listen to the latest episode of The Disruptive Capitalist.

Sam Sells sits down with renowned entrepreneur and real estate investor Cris Auditore Zimmermann to explore his remarkable journey from his first construction project in Nairobi to building a thriving portfolio of multifamily and commercial properties in Frankfurt.

Affordable Housing

Fannie & Freddie Double Down on Affordable Housing

Fannie Mae and Freddie Mac are stepping up their role in the affordable housing landscape. The Federal Housing Finance Agency (FHFA) has approved an increase in each agency’s annual Low-Income Housing Tax Credit (LIHTC) investment cap—from $1 billion to $2 billion—effectively doubling their combined capacity to $4 billion per year.

This boost drew praise across the industry. Advocates point to it as a timely lever to help finance up to 1.2 million additional affordable units, leveraging both new credits and increased equity. At the same time, voices across the sector caution that execution may face real-world constraints, like regulatory delays, limited staffing, and persistently high construction costs.

Still, many see this as a meaningful stride toward closing the nation’s housing gap. Half of the newly available funds are earmarked for "difficult-to-serve" markets, with at least 20 percent dedicated to rural communities under FHFA’s Duty to Serve initiative. It is clear that affordable housing efforts are aiming to reach underserved populations, and one to watch closely as projects start to materialize across the country.

Construction Trends

Developers Divided on Tariffs vs. Labor Savings

Some developers are finding a silver lining amid rising tariffs. While material costs have climbed, hard costs rose around 4% in the past 18 months—many are seeing labor become more affordable. Workforce housing developer Scott Choppin noted a shift toward more proactive subcontractors who are willing to travel farther and compete harder for projects. American Homes 4 Rent’s CEO, Bryan Smith, also highlighted improved operational efficiencies, helping to offset those tariff-related expenses.

Still, it’s not a uniform story across the board. Gregory Kraut of KPG Funds noted that smaller-scale projects aren’t seeing noticeable material cost increases, though labor remains a major expense amid cautious hiring and immigration-related workforce challenges. On the flip side, Jeff Klotz—CEO of The Klotz Group—reported significant spikes of 20% to 25% in material prices, with overseas cost advantages all but evaporated.

Other voices paint an even more mixed picture. For some, construction costs remain stubbornly high, and while bidding activity has ramped up, profit margins are tightening as contractors compete more aggressively. Overall, the landscape remains fragmented—and the real takeaway is that whether labor savings can balance tariff burdens really depends on the project type, region, and local market dynamics.