Expanded tax incentives aim to spur investment in areas of scarce development
SANTA BARBARA, Calif., January 14, 2026 – Tax incentives targeted at underserved and high-cost environments comprise the centerpiece of the U.S.’s affordable housing strategy, according to new research completed by Yardi® Matrix.
The federal government’s long-term extension of the Opportunity Zones program and double-digit expansion of Low-Income Housing Tax Credit allocations last year “signal a policy landscape increasingly oriented toward location-based tax incentives that align capital with affordability needs,” states a new Yardi Matrix national report. These actions, along with other measures, aim to “redistribute investment toward locations where development has historically been difficult to achieve.”
More than 348,000 affordable units are planned or under construction within Opportunity Zones and Difficult Development Areas, indicating “how incentives are reshaping supply pipelines at a time when longstanding affordability gaps require sustained production,” the report notes.
Phoenix, Dallas, Miami and Los Angeles have the most units under construction in Difficult Development Areas, which have high land, construction and utility costs relative to the area median income. Phoenix, Los Angeles, New Jersey and Salt Lake City lead in units under construction within the purview of Opportunity Zones, a program designed to amplify development in low-income submarkets.
With “geographically targeted federal incentive programs [playing] a larger role in shaping investment and development strategies,” affordable housing investors and developers will need to determine “which incentive structure aligns with a market’s underlying cost, demand and capital dynamics,” according to Yardi Matrix.
Get more in-depth analysis of the policy changes of 2025 that will drive affordable housing strategies from the January 2026 Yardi Matrix National Affordable Housing Report.
Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, single-family rentals/ build to rent, affordable housing, student housing, self storage, office, industrial, retail and vacant land property types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn more.
About Yardi
Yardi® develops industry-leading software for all types and sizes of real estate companies across the world. With more than 10,000 employees, Yardi is working with our clients to drive significant innovation in the real estate industry. For more information on how Yardi is Energized for Tomorrow, visit yardi.com.
Add Comment