For many Americans, the term “affordable housing” conjures images of hulking public housing towers with peeling paint and chain-link fences. For many investors, it evokes weak returns and high risk. For many developers, it’s synonymous with miles of red tape and not-in-my-backyard pushback.
These ingrained images and anxieties fuel persistent myths about what it actually takes to create housing that ordinary people can afford.
At the 2025 ULI Fall Meeting at San Francisco’s Moscone West Convention Center, in a session titled “Getting Creative: Unlocking Affordable and Mixed-Income Housing through Innovative Financing Solutions and Public/Private Partnerships,” housing experts, developers, and investors set the record straight. Panelists challenged some of the most common misconceptions about the crisis and available solutions, shedding light on what’s really possible in today’s market.
Below, these experts bust through four of the biggest myths about affordable housing.
Myth 1: Only the lowest-income U.S. households need affordable housing.
Truth: Half of renters in the U.S. are rent-burdened.
Approximately 50 percent of American renters are rent-burdened, spending more than 30 percent of their income on housing, according to Census data.
“There isn’t an affordable housing crisis, there’s a housing crisis,” said Chrystal Kornegay, chief executive officer of MassHousing, which helps developers build mixed-income housing by providing “soft debt,” loans with flexible repayment. “If we don’t figure out how to make the market work for the workforce, however you define that, we’re not going to get anywhere.”
While “uber-luxury” accommodations proliferate at the highest end of the market, and government subsidies support the lowest, there’s a supply glut in the “missing middle,” said Sean McReynolds, president of the Joseph J. Corcoran Company, which has partnered with Kornegay’s MassHousing to build the Residences at East Milton, 92 units in the suburbs of Boston, a fourth of which are affordable for moderate-income renters.
Despite demand, McReynolds said, there simply aren’t enough units for regular working people.
Myth 2: Affordable housing is not profitable. It’s too risky for investors.
Truth: It’s stable with slow but steady returns over time.
“It’s not as if affordable housing rents [don’t] increase,” said Yusef Freeman, a partner at the investment firm Vistria Group. “It’s a different return profile. You’re just not necessarily chasing these big bumps.”
According to Freeman, it’s important to view “mixed-income workforce” housing as its own “sub-asset class,” with a different return and risk profile than luxury or traditional government-subsidized affordable housing. While the ability to increase rent is limited when compared with the high end of the market, Freeman said workforce housing offers stable, defensible cash flows that can reliably grow at around 3 percent annually, based on his projections.
When developers commit to affordability—whether through government restrictions or voluntary caps—they limit rent increases to specific income levels, such as 60 or 80 percent of the area median income. To profit, investors need to keep the property affordable in the long term, Freeman said. Vistria operates through an open-ended investment fund designed to alleviate the typical pressure funds face to sell after five or seven years. Instead, Vistria holds properties while allowing the cumulative value of those steady rent increases to compound over decades.
Kornegay said that during and after COVID, private developers saw higher vacancy increases as remote workers left expensive cities. Many became more interested in affordable housing because its residents consistently paid rent, even during tough times.
“These are stable assets,” she said.
Myth 3: Affordable housing can’t be created without traditional government subsidies and/or tax credits.
Truth: Creative partnerships and funding methods can make things work—even without traditional tax credits.
For decades, it’s been widely assumed that affordable housing can only be built with government subsidies and Low-Income Housing Tax Credits. But emerging methods are proving that attainable housing can often be developed without these traditional supports.
When MassHousing backs a developer, it helps bring in private investment, Kornegay said.
Rather than providing tax credits, the state of Massachusetts is directly investing in the long-term financing of the Residences at East Milton project that McReynolds and Kornegay are working on.
MassHousing deployed $5 million from its Momentum Equity Fund as part of a layered capital stack that included $29.8 million in permanent mortgage financing from Freddie Mac.
“It really de-risks the project from a financing standpoint,” McReynolds said.
Referring to a different project, he emphasized the possibilities that open up with a “profit participation” model in which the state invests and shares in profits, thereby motivating all parties to cut costs and succeed.
Zach Tronti, development director at Gilbane Development Company, said his firm partners with government agencies but also receives financing from a wide variety of sources. On a transit-oriented project, that included Amazon’s Housing Equity Fund.
Myth 4: States have no tools to overcome NIMBYism
Truth: Massachusetts General Law Chapter 40B proves that states can step in.
Like many mixed-income and affordable developments, the Residences at East Milton faced community pushback.
“It was not for the faint of heart,” McReynolds said. “They fought tooth and nail [with] the typical, ‘not in my backyard’ [stance]. And they even challenged the state.”
While that could have been a death knell for a project in another state, McReynolds said he and Kornegay were “fortunate that we had the law on our side.”
That law is Massachusetts General Law Chapter 40B, a state statute that allows developers to override local zoning bylaws and building requirements to build affordable housing in communities with insufficient affordable housing stock.
“Getting these kinds of projects approved can be a long fight, but the laws help developers succeed,” he said, adding that once a project is approved, it sets a standard that makes future projects easier.
According to Alexander Marte, a senior development manager at Gilbane Development Company, states and cities that have enacted effective policies and programs draw in a lot more mixed-income development than those that don’t.
While misconceptions persist, cities like New York and states like Massachusetts show what’s possible, he said. The future of affordable housing depends on both bold policies and creative partnerships—the kind that make progress, despite the plethora of roadblocks, possible.
