construction among younger generations continues to wane. To retain electricians, carpenters, and plumbers, contractors must offer higher wages and expanded benefits, which drive labor costs up in tandem with materials. The National Association of Home Builders estimates that tariffs on steel, aluminum, and other inputs are adding more than $9,000 to the price of building a single-family home. These factors combine to create a financial environment where affordable housing is increasingly difficult to deliver. Just a few years ago, construction costs accounted for around 61 percent of the sales price of an average single-family home. By 2024, that share had risen to more than 64 percent. For affordable
housing developers, where every dollar counts, this narrowing margin can mean the difference between moving forward with a project or canceling it altogether. Even with tax credits, subsidies, or low-interest loans, the math often no longer works. Projects that once could close their financing gaps with modest public support now require far more than what government agencies or nonprofit partners are able to provide. RED TAPE The squeeze is felt not only in materials and labor but also in land and regulatory costs. In many urban centers, land acquisition is itself prohibitively expensive, consuming a large portion of the budget before
construction even begins. Layered on top are zoning requirements, environmental reviews, and building code compliance, each of which adds both time and expense. Lengthy permitting processes create delays that drive up interest and financing costs, embedding more expenses into already fragile projections. Even small changes in building standards or compliance can translate into thousands of dollars per unit. THE GAP WIDENS For those who rely on affordable housing, the stakes are high. Housing is generally considered affordable when it costs no more than 30 percent of household income. As construction costs rise, the gap grows wider between what families
24 | think realty magazine :: december - january 2026
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