The Department of Housing and Urban Development (HUD) plays a pivotal role in shaping U.S. housing policy, supporting urban development, and enabling access to affordable housing. Under the Trump administration, HUD is undergoing sweeping changes—both ideologically and operationally. The new administration’s early decisions are already impacting CRE professionals who support HUD programs with funding freezes and stalls in projects already in progress.
While this blog focuses primarily on residential housing, it’s important to underscore that residential trends serve as a leading indicator for broader commercial real estate dynamics. Decisions made at the federal level—especially those involving funding, permitting, and land use—don’t stop at the front door of a single-family home or apartment complex. These developments can trigger ripple effects across the entire CRE landscape, from demand for construction and environmental consulting to long-term planning in mixed-use developments and infrastructure investment.
As these developments unfold rapidly, LightBox will be tracking where HUD policy is heading, how these changes may continue to impact affordable housing initiatives, and the broader impacts on the CRE sector.
New Leadership, New Direction: Major Policy Changes
HUD’s current direction under the Trump administration is marked by introducing tighter eligibility requirements for federal housing programs, HUD workforce cuts, cancellation or freezing of some programs, while also introducing a new taskforce to encourage the use of federal land for affordable housing.
1. Tighter FHA Mortgage Eligibility
In March 2025, HUD announced that undocumented immigrants and non-permanent residents are no longer eligible for Federal Housing Administration (FHA) mortgages. The policy, framed as a move to prioritize U.S. taxpayers, reverses Obama-era guidelines that allowed broader access to home financing. The impact could be far-reaching in immigrant-heavy urban centers, potentially slowing homeownership growth and affecting demand for entry-level housing.
2. HUD Workforce Cuts
Like other federal agencies, HUD is subject to the administration’s broad-based staff cuts. The administration has announced plans to cut the department’s workforce by 50%, with reductions targeting departments that enforce civil rights laws, administer disaster recovery programs, and oversee grant management. This downsizing raises serious questions about HUD’s ability to carry out its core mission, particularly in underserved communities reliant on federal support.
3. Cancellation of Section 4 Grants
Signaling a shift in priorities, HUD has canceled Section 4 grants previously awarded to organizations like the Local Initiatives Support Corporation (LISC), Enterprise Community Partners, and Habitat for Humanity. These funds have been instrumental in affordable housing and neighborhood revitalization efforts, especially in low- to moderate-income areas. The cancellation threatens to stall progress in communities nationwide, reducing access to housing and weakening local economies.
4. Freeze of the Green and Resilient Retrofit Program (GRRP)
The administration’s decision in mid-March to freeze the $1.4 billion GRRP has left numerous affordable housing projects in limbo. The GRRP program focuses on energy-efficient improvements and distributes grants and loans to affordable housing in need of updates. While HUD clarified that the program hasn’t been canceled, it is under review to ensure alignment with its core mission of providing fair and affordable housing.
Projects already awarded—but not yet closed—are especially vulnerable. As of March 2025, only 22 of 270 awards had finalized deals, leaving more than 2,900 units awaiting over $150 million in funding. One example is Ashtabula Towers, a 202-unit affordable housing complex in Ohio that was set to receive a $10 million HUD loan. Those renovations are now stalled, highlighting the broader consequences of the freeze.
Environmental consultants supporting HUD lending programs are already feeling the impact of the immediate funding freeze. LightBox spoke to one leading consultant whose firm had more than 20 projects that were halted, and with funds frozen, it’s impossible to know the timelines for payment of work already completed or even when/if projects will restart. For owners, some of whom were just 1 or 2 weeks from closing, the loss of HUD funding from their financing package meant they could no longer proceed.
Some professionals note that while the freeze created an obvious lost source of revenue, coupled with the uncertain future of GRRP projects, it also allowed for a shift to refocus on core due diligence work, with more flexibility on turnaround times for other affordable housing engagements.
More broadly, the freeze reflects a changing federal landscape. Programs once seen as steady sources of billable work—such as HUD’s Green MIP mortgage insurance incentives—are now in jeopardy. Services related to climate risk evaluations and environmental justice are also being eliminated. For consultants and developers alike, adaptability is becoming essential as policy priorities shift.
5. Rollback of the Affirmatively Furthering Fair Housing (AFFH) Rule
A significant policy shift under the Trump administration has been the rollback of the Affirmatively Furthering Fair Housing (AFFH) rule. Introduced in 2015, AFFH required municipalities receiving HUD funding to assess segregation patterns, identify barriers to fair housing, and develop actionable plans to promote inclusivity. The current administration repealed this requirement, arguing that it imposed overly burdensome reporting obligations on local governments and interfered with zoning autonomy.
Some CRE analysts suggest that the rollback could create new opportunities for commercial real estate. With fewer federal reporting requirements and reduced HUD oversight, developers may encounter a more flexible environment for launching housing projects—particularly in suburban or transitional markets where AFFH compliance may have previously slowed permitting. This shift could lead to faster development approvals, potentially increasing housing supply in high-demand areas and stabilizing or lowering home prices. It may also open new investment opportunities, especially in jurisdictions where local officials are motivated to streamline development without federal constraints. However, the long-term impact depends on local governments’ responses—whether they continue to pursue inclusive housing policies or move away from them in the absence of a federal mandate.
These residential-focused shifts could signal a broader deregulatory trend with implications beyond housing. CRE professionals engaged in zoning, permitting, and community development should pay close attention, as relaxed oversight in one sector may foreshadow similar moves elsewhere.
6. Tackling the Shortage of Affordable Housing
The pullback in some HUD programs comes amid a nationwide shortage of 7 million affordable rental homes—a deficit expected to grow. In response, the Trump administration has introduced a significant initiative aimed at increasing affordable housing through the utilization of federal lands. On March 17, 2025, HUD Secretary Scott Turner and Department of the Interior (DOI) Secretary Doug Burgum announced the formation of the Joint Task Force on Federal Land for Housing. This collaborative effort seeks to identify underutilized federal lands suitable for residential development, streamline the land transfer process, and promote policies that enhance the availability of affordable housing.
This initiative represents a strategic shift in federal housing policy, leveraging the vast resources of federal lands to tackle housing affordability issues. By streamlining processes and focusing on underutilized areas, the administration aims to create new opportunities for residential development, particularly in communities that have historically faced barriers to housing access.
In parallel, local governments are taking proactive measures to address housing shortfalls within their jurisdictions.
- In Chicago Mayor Brandon Johnson has announced a historic $1.25 billion investment in economic and workforce development, with a significant portion dedicated to affordable housing.
- Philadelphia Mayor Cherelle Parker proposed a $2 billion plan in March 2025 to tackle the city’s affordable housing crisis through launching and expanding housing programs, offering tax breaks to stimulate development, and accelerating the conversion of city-owned properties into housing units.
CRE in a Time of Policy Flux
The evolving policies under the Trump administration are reshaping the landscape of federal housing programs, with consequences rippling through the CRE sector. While regulatory rollbacks and funding cuts introduce uncertainty, they also create opportunities for investors, developers, and municipalities willing to adapt to a shifting framework.
To be clear, it’s too early to make definitive predictions about the long-term impact of these changes. While some analysts predict the outlook may not be as dire as others suggest, the full effects remain to be seen. At minimum, the current policy direction offers a high-level marker of how future decisions could unfold in other sectors of the real estate market.
We recognize this blog spotlights a residential housing example—but in today’s interconnected built environment, what happens in one segment often foreshadows shifts in others. From consulting firms adjusting to policy delays to developers rethinking timelines, the signs are worth watching.
For CRE stakeholders, staying ahead means understanding not only where HUD policy is today but where it might be headed—and positioning accordingly.
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