Affordable housing developers are entering 2026 with mixed expectations, balancing optimism about long-term demand with immediate concerns over costs and policy shifts.
A new TD Bank survey shows that half of affordable housing professionals believe market challenges will affect their deal pipelines next year. They cite high construction costs and tariff-driven price increases as the biggest barriers.
Yet many still expect growth, particularly in multifamily, senior and workforce housing.
While only 29% of respondents plan to expand their activity in 2026, more than half believe access to affordable housing will grow, reflecting what TD Bank leaders describe as “cautious optimism” across the sector.
Andrew Warren, senior vice president and leader of the community development lending vertical at TD Bank, said the company has been adapting its approach to help projects remain viable in a challenging environment.
“I think, along with our partners, we’ve been pretty responsive,” Warren told HousingWire. “I think we’ve been adaptive, and I think we’ve been innovative in a lot of the structures and the rates that we been offering recently.
“We certainly know that projects are getting bigger, and I think we’ve responded to this increased size, including some of the commitments that we’ve made, to meet whatever needs there are.”
Construction costs remain a dominant concern as 55% of respondents name them as a key obstacle, followed by 39% who cited price increases from tariffs.
The survey findings come from 238 participants at the recent Governor’s Conference on Housing and Economic Development in Atlantic City, New Jersey.
Sustainability and long-term investment
Despite cost challenges, 62% of survey respondents expect affordable housing development activity to rise in 2026.
The strongest demand is projected in multifamily, senior and elderly housing, as well as workforce housing for essential and middle-income workers.
Warren said sustainability is becoming increasingly central to how TD Bank evaluates projects and supports developers.
“We can help developers know what materials last longer,” he said. “We certainly know what makes buildings more sustainable. I think this is a one-shot deal for a lot of these projects in these communities, the level of investment that we’re making in the long-term housing that we’re building.
“So we’re focused on lending into making more affordable or more energy efficient buildings. We are one of the leaders for passive housing investments, which are buildings that heat and cool 80% more efficiently than a conventional building across the country.”
Navigating Section 8 uncertainty
Policy uncertainty is another major factor shaping the outlook for 2026.
Sixty percent of survey respondents said proposed changes to the Section 8 Housing Choice Voucher Program would influence their development plans — and 84% of this group expects a negative impact.
Warren acknowledged that recent federal disruptions have slowed activity, but he said TD Bank remains committed to projects that serve the lowest-income households.
“I just want to emphasize that we’re not just a lender, we’re an investor, and we’re making a long-term investment,” he said. “With a lot of these projects, it’s often 15-plus years that we’re a partner. That goes beyond any economic or political cycle.
“We focus on understanding any government risks, and we’re going to continue to invest in projects with rental subsidies because we believe in them.”
Workforce housing, public-private partnerships
The survey highlighted workforce and middle-income housing as an area of growing opportunity — particularly as rising housing costs squeeze households that earn too much to qualify for subsidies but not enough to afford market-rate rents.
“I see a lot of opportunity, both in the workforce housing space and what’s called attainable housing,” Warren said. “That’s housing for people in the middle-income band that allows them to also keep their housing expense below 30% of the median income in that market.
“That focus is not just on rental housing, but on for-sale housing as well. For-sale housing is incredibly important across the country and something I think is achievable for a lot of folks within that middle-income band.”
Long-term message to developers
As developers look ahead to 2026, Warren said TD Bank’s message is rooted in partnership, expertise and shared risk.
“We have a multibillion-dollar portfolio, and we provide more than a billion dollars of new commitments to build and preserve affordable housing each year,” he said. “We can walk our partners through any range of issues with confidence.
“We develop deep relationships with our partners. We certainly lend and invest, but when we do invest, we’re not just a lender. We’re one of the largest and most active investors across our footprint.”
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