Key takeaways from the 2025 Texas Housing Conference

The 2025 Texas Housing Conference in Austin offered a deep dive into the evolving landscape of affordable housing development, financing, and policy. With the dust settling on recent legislative shifts and capital markets remaining tight, the recurring message was clear: success today requires stronger partnerships, deeper diligence, and strategic adaptability. Here are the top insights from our affordable experts who attended the conference.

1. Texas remains a magnet for LIHTC developers

Texas continues to draw national Low-Income Housing Tax Credit (LIHTC) developers thanks to population growth, comparatively favorable development costs, streamlined approval processes, and the continued availability of property tax exemptions. However, while the state remains attractive, it’s far from uniform in opportunity.

2. Austin: a cautionary tale in oversupply

Austin is facing notable headwinds, even in the LIHTC space. Operating deficits are rising due to high vacancy rates and increased lease-up concessions. Some deals are still closing, but they often rely on project-based subsidies, high operating deficit reserves (ODRs), and vacancy assumptions nearing 10 percent for non-Section 8 units. The gap between affordable and market-rate rents is narrowing, which adds pressure to performance.

3. Diligence in sponsor review is critical

Sponsor stress was a hot topic. Several cases of sponsor misconduct, ranging from falsified operating statements to fraudulent reserve draws, underscore the need for rigorous upfront reviews and ongoing asset management. Confirming REO cash flows are unencumbered and identifying early signs of distress are now essential best practices.

At Walker & Dunlop, our meticulous due diligence processes and deep sponsor relationships help protect clients and ensure stronger execution from start to finish.

4. Strong sponsors are leveraging scale and exclusivity

Established developers with a strong track record are demanding more from their capital partners, often requiring investors to bid across entire deal pipelines to gain access. This approach streamlines capital execution, enabling developers to scale more efficiently.

Walker & Dunlop’s holistic platform, spanning capital advisory, investment sales, LIHTC equity syndication, and more, makes us the ideal partner for sponsors seeking certainty of execution across multiple deals.

5. Build-to-rent (BTR) enters the LIHTC arena

The build-to-rent model, once a niche product, is gaining traction in Texas’s LIHTC pipeline. These large-scale developments offer attractive future value and scale for developers. The financing market is responding.

Walker & Dunlop is building out a competitive strategy to address this growing opportunity, leveraging our national scale and expertise to offer BTR-specific solutions. Learn more insights about Build to Rent by downloading our report highlighting the growth of BTR in 2025.

6. Credit pricing is rebounding selectively

While overall LIHTC pricing hovers in the high $0.70s to low $0.80s, stronger sponsors are seeing quotes at or above $0.80 for deals in strong markets. A clear takeaway: high-quality credits are commanding a premium as investors place greater value on sponsor strength and deal stability.

Walker & Dunlop’s LIHTC equity platform connects strong sponsors with credit-motivated investors, enabling efficient and competitive executions across markets.

7. Challenges at the closing table and new opportunities

Many deals are being restructured as financing partners walk away from LOIs. Walker & Dunlop, by contrast, has remained disciplined and committed, standing by every signed deal. This reliability is opening doors to new relationships as others falter.

It’s a strong reminder that in today’s environment, trust and follow-through are powerful differentiators.

8. A shift away from Permanent Supportive Housing (PSH)

Operational challenges and service funding gaps are pushing both nonprofit and for-profit developers to back away from PSH deals. Compliance concerns are compounding the issue, as some projects reportedly fall short of delivering on their promised services.

As developers reevaluate project feasibility, Walker & Dunlop offers strategic guidance across deal structuring and capital strategy to align community impact with financial performance.

9. Legislative changes: big wins, mixed timing

There was excitement around the “One Big Beautiful Bill,” which delivered long-awaited reforms, including a reduction in the 4 percent bond test from 50 percent to 25 percent and a permanent 12 percent boost to 9 percent LIHTC allocations. These changes are poised to unlock more capital for affordable housing, but their delayed rollout has left some developers in a holding pattern.

Walker & Dunlop is staying ahead of these changes to help clients move quickly when the timing is right.

The bottom line: demand is rising, and Walker & Dunlop is ready

As more affordable housing deals enter the pipeline each year, but capital sources tighten, developers and investors need partners who offer certainty, expertise, and scale. That’s what Walker & Dunlop delivers.

Our dedicated affordable housing platform provides seamless financing solutions across the capital stack. Whether it’s navigating complex LIHTC structures, sourcing equity, or delivering precise appraisals through Apprise, our holistic approach drives results that help our clients create, preserve, and revitalize the communities that need it most.

Looking to stay ahead in a shifting market?  Connect with Walker & Dunlop’s affordable housing experts today.

Special thanks to Pete Antonopolous, Bill Best, and Blair Holden for contributing to this article.