KeyBank Community Development Lending & Investment provided a $200 million construction loan to Conifer Realty and Community Preservation Partners for the rehab of Andrews Terrace in Rochester, New York. Community Preservation Partners

Top affordable housing lenders are optimistic this year will be better than 2023.

Rising interest rates, construction costs, and operating costs all strained the budgets of affordable housing projects last year. Uncertainty about the future made it difficult to adapt existing plans or make new ones.

Developments under construction struggled to stay on budget. Planned developments struggled to find construction loans. Completed developments struggled to close permanent loans. And potential buyers struggled to come to agreement with sellers on the right price for existing affordable housing properties and development sites.

Soft financing and some rigid program deadlines helped make deals happen in 2023. Now developers face many of the same challenges again in 2024.

“We’re still dealing with the same exact costs we were dealing with last year,” says Robert Likes, national manager of KeyBank Community Development Lending & Investment.

But these costs are no longer rising as quickly or unpredictably. Top affordable housing lenders hope that more stability will help them make more deals to finance affordable housing.

“There’s optimism that this year is going to be better than last,” says Jim Flinn, vice chairman of the debt and structured finance team at CBRE Affordable Housing.

Read More