Impact Growth Capital Newsletter

 This week at IGC:
NLIHC Reveals a Shortage of 7.1M Homes — Tax Reform Bill Signals Potential Win 

Real Time Market Snapshot

Data as of 6/11/2025

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Public Housing News

NLIHC Reveals a Shortage of 7.1M Homes

The United States faces a worsening affordable housing crisis for its lowest-income renters, according to the National Low Income Housing Coalition’s 2025 edition of The Gap report. The data reveals that there are only 34 affordable and available rental homes for every 100 low-income (LI) renter households nationwide. This persistent and widespread shortfall means that 7.1 million more affordable homes are needed to meet demand. In no U.S. state or major metro area does the supply of affordable housing meet the needs renters, highlighting a national issue that transcends regional boundaries.

The report further illustrates the stark challenges these renters face: 73% of LI households are severely cost-burdened, spending more than half of their income on rent and utilities. These households often must make impossible choices between paying rent and affording basic necessities like food, healthcare, and transportation. As a result, they are more likely to experience eviction, housing instability, and homelessness. In contrast, just 6% of non-low-income renter households are similarly burdened.

Private markets have a critical role to play in addressing the affordable housing shortage, particularly through strategies that align long-term capital with long-term need. Institutional investment in affordable housing has historically been limited by low margins and regulatory complexity, but this is now shifting. Innovative financing models, such as blended capital stacks, social impact bonds, and public-private partnerships, are helping de-risk affordable housing projects while maintaining mission alignment. In particular, investments that pair federal incentives like the Low-Income Housing Tax Credit (LIHTC) with state-level preservation funds are proving effective in expanding and maintaining the supply of deeply affordable units. As more private capital enters the space with mission-aligned intent, these tools will be essential to ensuring affordability is preserved at scale.

View the Interactive/Full Gap Report Here. 

Politics

Tax Reform Package Signals Potential Win for CRE Investors

A bipartisan tax bill making its way through Congress could provide significant benefits to the commercial real estate sector, should it become law. Among them is the extension of 100% bonus depreciation through 2026, retroactive to January 1, 2023. This would restore the full expensing benefit that began phasing out in 2023 (currently reduced to 60% for 2024) and allow investors to immediately write off the cost of qualifying property improvements. The legislation also proposes a fix to Section 163(j), reinstating the inclusion of depreciation and amortization in the calculation for deductible interest expenses—retroactive to the 2022 tax year.

Another provision is the proposed increase in the Qualified Business Income (QBI) deduction from 20% to 30%, offering additional tax relief to pass-through entities such as LLCs and partnerships that dominate the real estate investment structure.

The bill also seeks to re-establish Opportunity Zones for taxable years 2027 through 2033, reviving incentives like temporary deferral of capital gains taxes, step-up in basis for long-term holdings, and exclusion of taxable income on new gains.

Though the legislation still awaits final approval in the Senate, it passed the House in January by a 357–70 vote and has garnered strong bipartisan support. If enacted, the tax package would represent a significant realignment of tax policy in favor of commercial real estate.