The National Observer: Real Estate: Budget bill could mean big changes for affordable housing

I feel the need to reemphasize that sentiment is for the national market — every local housing market has its own unique story to tell. But in a recent analysis by The Business Journals of 8,936 ZIP codes, 5,788 — or 64% — posted a year-over-year increase in home listings in the first quarter. Of those, 698, or 7.8%, recorded an increase of at least 50%.

"Buyers today are in a stronger bargaining position than they’ve been in a long time," Orphe Divounguy, senior economist at Zillow Group, told my colleague Joanne Drilling. "Affordability is still a challenge, but it’s improved."

More inventory has long been needed in the for-sale market, as a lack of listings has contributed to the skyrocketing price of housing in the past few years, especially since the Covid-19 pandemic.

And while many buyers remain sidelined, at least one age cohort seems interested in buying a home this year: millennials.

Affordable housing's future in limbo

Proposed changes to one of the biggest federal programs used in affordable-housing development have some in the industry hopeful — but sweeping cuts proposed for a major federal agency have those same industry groups alarmed.

The current federal budget bill includes several proposed changes to the Low-Income Housing Tax Credit (LIHTC), including restoring the 12.5% increase for 9% LIHTC allocations that expired in 2021 for allocations between 2026 and 2029, lowering the 50% Private Activity Bond (PAB) financing threshold test to 25%, and providing a 30% basis boost to affordable housing in rural and Native American communities.

For Daniel Cruz, senior vice president at Boston-based Cruz Development Corp., the proposed LIHTC provisions are welcome for affordable- and mixed-income housing developers like him.

The provisions in the bill could cut, in Cruz's estimation, at least two years off what's already a lengthy process to secure financing, approvals and other processes to build new affordable housing.

But if proposed massive cuts to the U.S. Department of Housing and Urban Development come to fruition, Cruz said that would materially impact tenant- and project-based Section 8 vouchers — and have a detrimental impact across the industry.

"If you’re talking about a 35% cut in those resources, you’re going to impact probably every transaction there is in an adverse way," Cruz said. "How many landlords can lose 35% or 40% of their rental income and still operate? I don’t know how that would work."

Architecture industry feels tariff impact

Reported architecture-firm billings activity in recent months has slipped, owing in part to continued uncertainty around tariffs and U.S. economic policy.

That's according to the latest American Institute of Architects/Deltek Architecture Billings Index, which declined to 43.2 for the month of April. Although the recent decline may be attributed to rapidly changing federal trade policy since the start of the year, billings have declined for 28 of the past 31 months, according to the index.

New project inquiries also decreased for the third month in a row in April, and the value of new design contracts has declined at the majority of firms for 14 consecutive months, according to the AIA.

It looked in the fourth quarter like the architecture industry would be seeing a bit of an upturn in 2025, but that hasn't materialized, Kermit Baker, chief economist of the AIA, told me.

"Clearly, the tariffs [are having an impact], but even more so than the tariffs is the uncertainty of what’s going to stick or not," Baker said. "If you know the parameters, you can plan around it, but not knowing what shoe is going to drop next is problematic."

Hospitals push for capacity in booming NC

In early 2024, North Carolina had a hospital occupancy rate of about 80% — one of the highest rates in the country and one that could portend a health-care crisis in the fast-growing state if capacity needs aren't soon addressed, reports Zac Ezzone at the Triangle Business Journal.

The issue isn't limited to North Carolina. Dr. Richard Leuchter, a physician and researcher at the University of California, Los Angeles, has conducted research that suggests the national hospital occupancy could reach 85% by 2032. That rate is considered a hospital-bed shortage.

"That’s when we start to see that hospitals have a lot of operational issues," Leuchter told Ezzone. "When you have these relative shortages, there are people boarding for a long time in the [emergency department]; you start to miss medications, you miss diagnoses, you give the wrong medications."

Adding it up: North Carolina's 2025 State Medical Facilities Plan identified a need for 1,011 additional hospital beds across the state, with Wake County — home to Raleigh — receiving the largest share, at 267 beds. That surpasses the previous high marks of 423 and 388 needed beds in 2023 and 2024, respectively. The needs could be even higher in 2026, with a draft document presented during a May meeting outlining the need of more than 2,500 hospital beds throughout the state, although that figure is not yet finalized.

Despite the identified need for more beds, North Carolina has one of the most restrictive certificate-of-need laws in the country, which means building capacity can involve lengthy delays and costly appeals. That's, in part, deterred some out-of-state providers from moving into the state, although experts say that may soon change.

Three big numbers