SURFING WITH THE ELEPHANT
In June, my article Opportunity Cost explored Washington State’s pivotal moment in housing policy, highlighting how market-driven strategies could help rental housing providers and property investors stay ahead. This summer, federal action confirmed those trends. Key policy moves from Congress, US Department of Housing and Urban Development (HUD), and the White House are reshaping the housing landscape and sending clear signals to property owners, developers, and advocates. For RHAWA members, understanding these developments means staying prepared, protecting investments, and spotting opportunities early.
FEDERAL HOUSING DEVELOPMENTS: Summer 2025 in Focus
Several major federal actions have defined the summer. They range from new modular housing incentives and tax relief measures to budget proposals and executive actions that will influence housing operations in the months ahead.
The Renewing Opportunities in the American Dream (ROAD) to Housing Act, passed unanimously by the Senate Banking Committee on July 29, 2025, is a pivotal move for modular and factory-built housing. By clarifying definitions for modular, manufactured, and rural housing and streamlining Federal Housing Administration (FHA) and US Department of Agriculture (USDA) financing, the law removes long-standing barriers that kept many projects from securing funding. For Washington providers, this change opens the door for modular construction to move from concept to execution more quickly. Builders using fire-resistant, ESG-aligned materials may also benefit from improved insurance options in wildfire-prone areas east of the Cascades, making projects more feasible than in previous years.
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, with Vice President J.D. Vance casting the tie-breaking vote, reinforces the federal push toward private capital and market-based housing solutions. OBBBA strengthens federal investment incentives, extends capital gains deferrals, and restores the mortgage insurance premium deduction for homebuyers. It also raises the State and Local Tax (SALT) deduction cap to $40,000 in 2025 before phasing out for higher incomes. For rental housing providers, these changes can indirectly ease market pressures as some renters transition to ownership and as federal tax flexibility offsets rising local property costs. While Opportunity Cost covered the underlying Opportunity Zone structure in detail, this summer’s legislation confirmed that the federal government intends to not only keep these market-driven tools active and attractive but to grow their significance as an investment tool to fuel housing supply and economic growth.
The FY2026 HUD budget proposal, released in June, signaled a major philosophical shift toward self-sufficiency and time-limited assistance. Proposed cuts of up to 44% in rental assistance and homelessness programs, paired with new work requirements, could tighten the safety net for tenants while pushing more responsibility to local systems. For RHAWA members, especially those with Section 8 tenants, the message is clear: be prepared for potential payment delays, shifting eligibility rules, and program adjustments. Evaluating exposure, maintaining strong relationships with local housing authorities, and staying flexible in tenant selection can help mitigate risk.
FEDERAL LAND AND HUD’S MARKET-DRIVEN VISION
OBBBA also authorized public-private partnerships to develop underutilized federal land for housing. While these opportunities will require navigation of Washington’s Growth Management Act and local zoning processes, the move signals that federal policymakers are serious about leveraging every available tool to address the housing shortage. Developers and investors who pay attention to these openings may find first-mover advantages in aligning projects with federal priorities.
HUD Secretary Scott Turner underscored this market-oriented approach at the Bipartisan Policy Center’s Terwilliger Center Summit on June 18, 2025. He cited the nation’s seven million-unit deficit and highlighted modular and factory-built housing as the most cost-effective solution, with units averaging $124,000. Turner emphasized that HUD is leaning into deregulation, retiring more than 600 outdated FHA guidelines and removing the Affirmatively Furthering Fair Housing rule to reduce project delays and lower costs. He also reiterated the administration’s commitment to work requirements and limited-duration subsidies, emphasizing that short-term support and personal responsibility are now central to federal housing strategy.
MARKET TIMING AND THE NEXT WAVE
Even with supportive policy, the success of new projects will still hinge on interest rates. With rates hovering between 6 and 7 percent, financing remains tight. Speculation about potential cuts in September or December 2025 has investors weighing whether to act now or wait for cheaper capital. Urban investors in Seattle must balance debt service against rental income stability, while rural and suburban providers in areas like Yakima or Spokane may see modular projects align well with future rate relief.
On July 24, 2025, President Trump issued Executive Order 14218, “Ending Crime and Disorder on America’s Streets.” While primarily a public safety measure, the order ties federal homelessness funding to compliance with treatment and self-sufficiency requirements. For providers in Seattle and Spokane, this could influence local housing strategies, funding access, and program design. I will explore these implications in depth in my next Elephant in the Room article, as this policy could reshape how communities manage high-barrier populations and encampment response.
Summer 2025 confirmed that the federal housing market is moving toward private capital, modular innovation, and performance-based support. For RHAWA members, the key is to stay alert, flexible, and proactive. By anticipating these shifts and leaning on RHAWA’s guidance, you can protect your portfolio, capture opportunity, and ride the next wave of federal housing policy with confidence.
SOURCES
- Senate Banking Committee, ROAD to Housing Act Summary (July 2025)
- Congress.gov, One Big Beautiful Bill Act (Public Law 119-21)
- HUD Press Release, Remarks by Secretary Scott Turner at the 2025 Terwilliger Center Summit (June 2025)
- National Low Income Housing Coalition (NLIHC), Analysis of FY2026 HUD Budget Proposal (July 2025)
- Novogradac, FY2026 Trump Budget Blueprint (2025)
- White House, Executive Order 14218 (July 24, 2025)
- Modular Building Institute, The Case for Modular Construction (2025)
- Freddie Mac, Economic and Housing Forecast (2025)