- The prolonged shutdown is disrupting the multifamily and affordable housing sectors, with key support programs like SNAP and Section 8 nearing funding exhaustion.
- Workforce reductions at HUD and other agencies have frozen loan approvals, inspections, and voucher processing.
- Developers warn of stalled projects, rising financial strain on renters, and growing instability in capital markets.
Shutdown’s Ripple Effects Are Now Hitting Hard
Bisnow reports that the government shutdown is now in its fifth week—the second-longest in US history. What began as a bureaucratic slowdown has become a major disruption across the affordable housing ecosystem.
Nov. 1 is seen as a tipping point. That’s when the Supplemental Nutrition Assistance Program (SNAP), which supports over 40M people, could stop issuing payments. Soon after, Section 8 voucher funding may also run out.
“There’s real concern,” said Nicole Upano, assistant vice president at the National Apartment Association. “We’re worried about missed rent payments and the renters we serve.”
Affordable Housing Pipeline Faces Major Blockages
Due to the shutdown, federal agencies have furloughed most staff. HUD is operating with just 25% of its workforce. As a result, new loans are stalled, inspections are paused, and developers can’t access critical financing tools.
Key disruptions include:
- HUD Loan Processing: New applications for FHA-insured loans are frozen.
- Voucher Delays: Project-based voucher approvals are on hold, leaving many deals in limbo.
- CDFI Fund Shutdown: All staff at the Community Development Financial Institutions Fund have been laid off, stopping disbursements of tax credit financing.
- HOME Program Delays: The Office of Community Planning and Development furloughed 21 D.C. staffers, freezing access to $1.25B in funding.
- Insurance Gaps: The National Flood Insurance Program can’t issue or renew policies without congressional reauthorization.
These delays are already affecting development timelines and lender decisions.
Developers Warn of Capital Market Fallout
In South Florida, Neology Group CEO Lissette Calderon says the shutdown has caused unexpected obstacles. One of her towers needs FAA clearance due to its height. That request has stalled.
In another case, a lender couldn’t visit a project site because of a flight cancellation tied to an air traffic controller shortage. These issues, she noted, create bigger risks.
“Markets don’t like uncertainty,” Calderon said. “It’s getting harder to raise money or refinance. If this continues, it’ll rattle the capital markets.”
Get Smarter about what matters in CRE
Stay ahead of trends in commercial real estate with CRE Daily – the free newsletter delivering everything you need to start your day in just 5-minutes
Backlogs Could Delay Year-End Deals
The timing is also a problem. Developers face year-end deadlines to lock in Low-Income Housing Tax Credits (LIHTC). If projects can’t close by Dec. 31, millions in credits may be lost.
Rebecca Simon, a partner at Nixon Peabody, warned of escalating delays. “Each day adds to the backlog,” she said. “HUD already had fewer staff than it did at the start of this administration. This just compounds it.”
Social Safety Net Under Threat
A leaked HUD memo shows plans to shift Continuum of Care funds from permanent housing to temporary shelter. That change would reduce funding for the deepest affordable housing options—already in highest demand.
SNAP and Section 8, which help tenants pay rent and afford food, are also at risk. If payments stop, renters may fall behind and owners may struggle with cash flow.
Many housing authorities are already limiting new voucher issues or curbing rent increases on existing ones. They’re trying to stretch what funds they have.
Smaller Developers May Suffer Most
The longer the shutdown lasts, the more likely it is that small and mid-sized firms will struggle. “Some just won’t be able to absorb those losses,” said Upano.
In Calderon’s buildings, some tenants have already missed federal paychecks. Others are asking for payment deferrals. “It’s real,” she said. “Whether it’s a federal worker or a small business owner, they’re all feeling this.”
What Happens Next
If the shutdown continues past mid-November, HUD’s Section 8 program may exhaust its funds. That could trigger a wave of missed payments, evictions, and canceled developments.
Even after the government reopens, the backlog may take months to clear. In the meantime, developers, housing advocates, and renters face growing uncertainty.
The longer the shutdown drags on, the deeper the damage across the affordable housing sector.
