Affordable rental housing financed by private activity bonds is showing a mix of good and bad news with big changes expected in the mobile home subsector by way of the 21st Century ROAD to Housing Act.
"We observe divergent financial and operational performance trends across our nonmilitary, stand-alone rental housing bond subsectors," said S&P Global Ratings in a report.
"In the mobile home park subsector, revenue has outpaced expenses, leading to improved debt service coverage and positive rating actions. Similarly, our rated universe of age-restricted housing has stabilized, reflecting a broader recovery from pandemic-era volatility."
S&P breaks the affordable rental sector down into four subsections of age-restricted, section 8, mobile home parks, and unenhanced affordable housing.
Private activity bonds and low-income housing tax credits are key chips in the capital stack used to finance affordable housing development.
Age-restricted affordable housing typically requires renters to be either over 55 or over 62 with income levels weighed against the local area median income.
"The age-restricted housing subsector continues to recover from the pandemic, with debt service coverage rising year over year, but retains challenges in expense management," said S&P.
The agency sees the sector as stable and notes a $585 million drop in outstanding debt.
Staffing needs are expected to grow in conjunction with an aging population and longer lifespans.
While age restricted and mobile housing are mostly stable and growing the other two subsectors are under duress.
"Section 8 and unenhanced issuers remain stressed," said S&P.
"Insurance, labor, and maintenance costs continue to outpace revenue in these subsectors, compressing operating margins. In addition, Section 8 credits remain subject to federal appropriations from the U.S. Department of Housing and Urban Development budget."
HUD is experiencing its own stress via a lawsuit launched last week by the National Urban League and other housing organizations over a $56 million claw back of congressionally-appropriated funds designated for housing counseling programs.
The Trump administration exercised a legally disputed "pocket rescission," to cut a total of $810 million in funding for housing, health, education, and other programs, which raised concerns with Sen. Susan Collins R-Maine, who's currently battling for her seat in the upcoming midterm elections.
"This move shows that (the Office of Management and Budget) intentionally withheld these funds for months to execute this unlawful cancellation of appropriations that were approved on a bipartisan basis and signed into law," said Collins, who chairs the Appropriations Committee.
The court ordered the administration must respond to the plaintiffs by Oct. 9, and the plaintiffs may respond to that filing by Oct. 19.
The Trump administration's checkerboard responses to ongoing housing affordability issues include passing the One Big Beautiful Bill Act which loosened restriction on low-income housing tax credits, and the bipartisan ROAD bill which became law without the president's signature.
Efforts at implementing permitting reform have also been less than inspiring for housing advocates.
"A mid-term grade on the Trump administration's efforts to reduce federal red tape that unnecessarily makes it more difficult and expensive to build housing would be at best an incomplete," said Stockton Williams, executive director of the National Council of State Housing Agencies.
