National Affordable Housing Report – January 2026
Federal policies in 2025 aimed to boost affordable production in low-income and high-cost areas, according to a new Yardi Matrix research bulletin.
Federal policy changes in 2025 have zeroed in on property location through modifications aimed to align capital with affordability needs. New updates included extensions to the Opportunity Zones program, LIHTC enhancements in both the 4 and 9 percent categories, as well as increasing project eligibility for Difficult Development Areas benefits.
All these measures aim toward improving project feasibility, either in low-income areas in the case of the OZ program or high-cost environments in the case of DDA benefits. The DDA perks can bolster LIHTC allocation, enabling developers to claim additional tax credits when constructing in areas with high land, utility and construction costs.
More than 3.5 million affordable units have debuted by capturing LIHTC since the program’s inception in 1986. By comparison, the OZ program kicked off in 2017 and has since facilitated the construction of 2.3 million apartments, both market-rate and income-restricted.
By combining OZ and DDA units, the total count reaches 6.4 million apartments; however, just 1.3 million are fully affordable. The potential for growth is high as 348,000 units are in various stages of development across both tracts, totaling 5.4 percent of total stock.
That pipeline, which includes both under-construction and planned units, will boost the affordable stock by 12.7 percent, while the market-rate inventory is set to grow by just 3.5 percent. Strictly by under-construction criteria, income-restricted units underway make up 6.9 percent of DDA stock and 5.5 percent of OZ inventory.
Observing OZ and DDA activity at the market level
Breaking down the DDA pipeline by market, Yardi Matrix’s latest analysis reveals there are six metros comprising more than 2,000 fully affordable units underway, including New York (4,264 apartments), Los Angeles (3,122), Seattle (2,377), Orlando (2,184), Phoenix (2,036) and San Diego (2,013).
Across Sun Belt metros, DDA projects rose to prominence due to rapid population growth and increasing construction costs, which narrowed affordable development margins. For instance, Phoenix’s DDA affordable pipeline, including both planned and underway units, makes up 90 percent of stock.
Aiming to amplify construction across low-income areas, OZs attracted substantial development in metros such as New York (3,315 affordable units underway), Los Angeles (2,657), Austin (1,984), Washington, D.C. (1,698), Salt Lake City (1,656) and Miami (1,505).
Salt Lake City is one of the clearest cases of OZ-driven acceleration, as the fully affordable pipeline makes up 27.2 percent of stock. Austin is next, with its income-restricted apartments underway accounting for 21.1 percent of inventory, followed by Columbus, Ohio (16.0 percent) and Raleigh-Durham, N.C. (12.7 percent).
OZs and DDAs aid low-income areas while alleviating cost pressures
When taken together, DDAs and OZs function as complementary tools, rather than competing policies. Combined, they ensure that development reaches both cost-constrained markets and low-income areas. Such pipelines are most resilient where incentives align with local conditions and reduce risk while improving capital efficiency.
Against the backdrop of elevated construction costs and capital constraints, pursuing a federal incentive will play a significant role in development and investment strategies. Discerning players ought to pick and choose the right program and site, underwriting and deploying capital accordingly to be best positioned in capturing the next wave of affordable housing production, according to Paul Fiorilla, director of research at Yardi Matrix and Jacob Gonzales, senior research analyst.
Read the full Yardi Matrix affordable housing report.
