More Tax Credits And Fewer Investors Squeeze Affordable Housing Deals Article originally posted on Globe St. on July 20, 2026 Institutional capital is pouring into affordable housing tax credits, but a shrinking pool of investors is now setting the terms — driving up yields, pushing down price per credit and leaving more deals scrambling to fill widening equity gaps, according to The Richman Group’s Richard Richman, who spoke with GlobeSt.com about the shifting investor base and its impact on new construction. Affordable Housing Investors’ Profile Shifting The Richman Group recently closed $535 million in two affordable housing multi‑investor funds, bringing more than $1.4 billion in equity raised over the past year from leading banks and insurance companies. That kind of volume underscores how committed institutional capital remains to the sector, but it also highlights a quieter structural shift: the investor roster looks nothing like it did in the 1990s, when names like Heinz, Eli Lilly, Campbell Soup, Verizon and Intel were active participants, according to Richman. “That’s gone,” he noted, explaining that today’s affordable housing equity is coming almost entirely from banks, insurance companies and the GSEs, each with very different motivations. Banks are driven largely by Community Reinvestment Act obligations that require them to make loans and equity investments in the communities where they operate, with branches and offices serving as the main test, Richman said. Those CRA requirements run on roughly three‑year cycles, which means a bank that has already hit its target may pull back temporarily, while a bank that is behind will often become more aggressive as the deadline nears. Insurance companies, by contrast, are not subject to the CRA and invest purely for economic reasons, currently targeting around a 9.5 percent tax‑free return over 15 years, compared with roughly 7.5 to 8.5 percent for banks investing with CRA credit, according to Richman. He added that The Richman Group has not lost an investor dollar in a tax credit investment in roughly 30 years, across $20 billion to $25 billion of equity over its 40‑year history. Beyond the numbers, he said, relationships, ease of execution and asset management still matter, but the decision ultimately comes down to yield and price per credit. Track Record And Pricing Dynamics For underwriters and investors, track record still matters, but less than it once did, Richman said. In the early years of the program, investors were genuinely nervous about the sector and leaned heavily on sponsors’ histories. The long performance of the tax credit program has since made them more comfortable, even “a bit complacent,” he said. Investors still perform real due diligence and hire firms to underwrite projects and properties, but there is now a general confidence that, when structured properly, these investments are safe, he added. Today’s decisions increasingly concern how investors balance yield against price per credit and those two levers do not always move in tandem, according to Richman. Some fund structures use leverage to spread out an investor’s payments, which can produce a higher effective yield but often requires paying more per credit, he said. Other investors want no part of that trade-off and would rather pay less per credit even if the yield looks lower on paper, a choice that ultimately reflects each institution’s own financial approach, he added. What stands out in the current market, Richman said, is that price per credit has come down meaningfully over the past few years while yields have moved higher, reshaping the economics for both investors and developers. Tax Law, Geography And A Narrower Capital Base Richman said The Richman Group’s $1.4 billion of equity raised in a single year signals both the strength and the concentration of institutional capital in affordable housing. The capital is serious, but it is coming from a smaller, more concentrated base of banks, insurance companies and GSEs rather than the broader corporate universe that participated in prior decades, he said. Where that capital flows also depends heavily on geography, because banks invest to satisfy CRA obligations in the markets where they do business, measured largely by where they have branches and offices, according to Richman. New York City and Los Angeles see intense competition for credits because so many banks operate there, while markets with fewer competing branches, such as Atlanta, experience less competition and lower pricing, which in turn affects yield, he said. Utah is one of the most competitive markets, Richman added, because its favorable laws make it an attractive place for banks to be based, similar to Delaware’s role in corporate policy. Layered on top of these geographic dynamics is the impact of recent tax legislation that potentially doubled the amount of tax credit available through bond financing, which on paper could expand the annual supply of tax credit equity by as much as 50 percent, according to Richman. The number of investors has not increased anywhere near that rate and when the supply of credits rises without a corresponding increase in investor capital, the price per credit falls and yields rise as a limited pool of money chases more deals, he said. As a result, the amount of equity a project can raise today is less than it would have raised two years ago, creating a funding gap that must be filled with soft money from state or local housing agencies or, in some states, a separate state tax credit and there is only so much of that capital to go around, Richman noted. Whether the additional units envisioned by the new tax law actually get built will depend on how much states, cities and local housing authorities can contribute to filling that gap, he said. For the first time in his memory, there are deals — even in markets like New York City — that are struggling to find equity. Institutional capital has not left affordable housing; if anything, Richman said, it is being rewarded with better yields. The challenge now is that the number of investors has not kept pace with the growing volume of available tax credits and that mismatch may determine how many of the projected additional projects actually move from pro forma to reality over the next several years.