New Programs Aim for Permanent Housing Affordability

• Defining social housing: Cities like Seattle and Atlanta are using public land and new taxes to build high-quality, permanently affordable housing.

• Creditworthy: An expiring tax credit might make it harder for complicated office to residential conversions to pencil.

• Permit pressure: San Francisco’s sharp drop in multifamily permits is worsening affordability and pressuring officials to boost supply.

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Perspectives

From Seattle to Atlanta, New Social Housing Programs Seek to Make Homes Permanently Affordable for a Range of Incomes

Two-thirds of Seattle voters recently endorsed a bold experiment: a 5 percent payroll tax on incomes over $1 million to fund a dedicated public development authority that aims to create, own, and manage permanently affordable homes for households earning up to 120 percent of the area median income. This initiative follows years of unchecked rent hikes driven by tech wealth (Amazon, etc.) and mounting displacement across the city. Across the country, policymakers have begun looking to social housing models rooted in Europe, anchored in design quality, resident governance, and resilience against market speculation. This growing movement represents a clear shift away from the traditional U.S. divide of market-rate versus income-restricted housing, aiming instead to build high-performance, mixed-income communities that remain affordable in perpetuity.

Seattle isn’t alone. Atlanta launched a quasi-public non-profit to aggregate underutilized city land, secure bond financing and partnerships, and develop mixed-income housing with permanent affordability features. In less than three years, the city has moved forward on roughly 40 projects, producing around 10,000 units under construction or completed with another 7,000 delivered by leveraging city-owned land. Atlanta’s approach includes placing residential high-rises atop public amenities like fire stations and rezoning 100 acres for mixed-use revitalization, with at least 30% of units reserved for households earning below 80% of the area’s mean income.

Some critics bristle at the “social housing” label, arguing that existing nonprofits could scale with adequate funding. Atlanta’s experiment faces cautionary comparisons to past deals such as contentious tax-break agreements that yielded fewer affordable units than promised. But early wins offer proof of concept. These efforts suggest a nascent but potentially transformational third model—beyond housing vouchers and market-driven supply—to deliver quality, community-centered housing that remains affordable for future generations.

Overheard

Section 179D Tax Credit Repeal Risks Derailing Office-to-Residential Conversions

The recent repeal of the long-standing Section 179D energy efficiency tax deduction, signed into law on July 4th as part of the Trump administration’s massive domestic policy bill, could upend efforts to revive obsolete office buildings and other distressed commercial properties.

For nearly 20 years, the 179D tax incentive has been a quiet catalyst behind numerous adaptive reuse projects, providing critical tax relief that has incentivized owners to invest in energy efficiency upgrades, such as new HVAC systems, improved lighting, and enhanced building envelopes. These upgrades often formed the backbone of larger repositioning strategies, enabling owners to stabilize occupancy, boost valuations, and meet insurance and municipal compliance thresholds.

Without it, the economics of converting underperforming offices — already hit hard by record-high defaults — may become far less viable. Owners and service firms that built business models around energy retrofits now face uncertainty. Private lenders and municipalities lack the standardized frameworks necessary to replace the deduction’s benefits, leaving many owners wary of new programs with unclear legal and accounting implications. 

The new domestic policy bill sunsets the credit next June, prompting industry groups to lobby for its return. Meanwhile, the loss of the 179D tax incentive may threaten not only the future of struggling office assets but also the broader momentum toward a greener, more resilient commercial real estate sector.

San Francisco’s Housing Pipeline Stalls as Office Conversions Gain Traction

San Francisco’s multifamily pipeline has collapsed—from roughly 20 units per 10,000 residents in the pre‑pandemic years to a mere 8.4 units between April 2024 and May 2025—less than half of the pandemic-era rate and trailing the national average. At the same time, multifamily rents surged, reaching 2.8 % annual growth in February. The housing problems are putting more pressure on city officials to find ways to help increase the supply of housing

The usual suspects are still in play: steep financing costs, rising construction expenses, and one of the slowest entitlement pipelines in the country, dragging approvals into what could be 18 months of limbo. Even well‑intentioned policies like four‑plex rezoning haven’t moved the needle—too many small developers remain caught in red tape and soaring costs . While Mayor Lurie rolls out legislative fixes to relax density caps and streamline permitting, the fixes target housing, not the financing lumbering behind it.

With office vacancy hovering around 35%, down slightly from peak but still painfully high, the dismal office market presents an unexpected upside. Developers and investors are now ramping up on office conversions. This means the same supply squeeze clogging housing may finally nudge the city into being a better place to develop much-needed new housing.

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