A consequential executive order from President Donald Trump could be a game changer for impact investors working in affordable housing and home ownership – in a good way.
The executive order is related to Opportunity Zone incentives – a law passed under his first term to spur development in underinvested US zip codes – and it could make it possible to funnel some of the $100 billion in private capital mobilized for distressed Opportunity Zone communities into much needed single family-home development.
The issue of affordable home ownership, as opposed to rentals, is one of the thorniest challenges facing impact investors and funders concerned about the vital issue of access to housing. We have a fresh opportunity to address it.
Policy changes
On March 13, the President directed the Treasury Department and the Department of Housing and Urban Development to evaluate how to align Opportunity Zone incentives with single-family home construction. The potentially transformative directive was part of a broader order on housing.
Just a day before, the Senate overwhelmingly passed the 21st Century ROAD to Housing Act to tackle supply-side bottlenecks in housing development by streamlining environmental reviews and authorizing pre-approved home designs. The Act, led by Sen. Tim Scott, Republican of South Carolina, and Sen. Elizabeth Warren, a Massachusetts Democrat, also bars institutional investors from acquiring single-family homes and converting them into rentals – a trend that has led to a shortage of affordable homeownership opportunities in the US.
The ROAD Act has passed the Senate and is now pending action in the House. The executive order has given Treasury and HUD a clear mandate. Together these actions represent the most serious federal commitment to housing supply in a generation.
OZ update
The capital problem addressed in Trump’s executive order and the permitting problem addressed in the ROAD Act require different solutions. This piece focuses on the capital problem.
For the capital problem, legislation alone cannot fix the fundamental financial barrier that makes new starter homes unaffordable even after they are built. Most teachers, nurses and police officers still cannot afford new-construction starter homes today.
While Fannie Mae and Freddie Mac, the two US government-backed housing finance agencies, provide liquidity for existing homes, they aren’t structured to incentivize the risk of low-margin, entry-level construction.
Section 5 of the executive order is where the capital solution begins. It directs Treasury and HUD to jointly evaluate mechanisms to align Opportunity Zone, or OZ, incentives with single-family home construction.
In January 2026, I submitted a white paper titled “The American Builder Act: Restoring the ladder of ownership” to legislators and their staff across the political spectrum. I wrote the paper – a roadmap for affordable homeownership, essentially – in response to conversations with federal administrators who were seeking solutions to the homeownership crisis. Section 5 reflects that roadmap.
To grasp why Section 5 matters, it helps to ask why virtually none of the $100 billion of private capital mobilized for distressed US communities through the Opportunity Zone legislation has been used to build starter homes for ownership.
The Opportunity Zone program, made permanent by the One Big Beautiful Bill last July, catalyzed that capital without a dollar of taxpayer spending. That is a genuine policy achievement. But most of it has been used for multifamily apartment buildings, hotels and commercial projects.
This was not a market failure. It was a regulatory miscalibration. The Treasury rules governing Opportunity Zones were written for assets held for long periods – 10 years at least. Those rules made rental towers and commercial projects financially viable, but made for-sale home construction nearly impossible.
I have watched this “commercial cliff” disqualify for-sale housing for years. The perverse result is that in the very communities the program was designed to empower, tax incentives have been manufacturing a permanent renter class.
Regulatory adjustments
While Section 5 of Trump’s executive order offers an opening to addressing affordable home ownership. It only directs Treasury and HUD to “evaluate”, however; it does offer a path to implementation. The gap between a promising directive and actually building homes will be determined by the technical decisions Treasury makes in the coming weeks.
The four regulatory reforms below are recommendations have been developed in conversations with lawmakers and staff on both sides of the aisle. They are not partisan proposals that are as viable in a Republican budget reconciliation 2.0 package as they are in the ROAD Act that just cleared the Senate. They are proposed technical improvements.
Enable capital recycling. Authorize Opportunity Zone funds to reinvest proceeds from starter home sales in Opportunity Zones into new qualified projects within 365 days, tax-free. Leveraged with conventional debt, this capital-velocity mechanism turns a stationary vault into a factory for homeownership – each dollar redeployed more than ten times over the decade – can fund up to 500,000 affordable homes annually.
Eliminate the rural income penalty. Housing affordability eligibility in rural America is currently benchmarked against suppressed local median incomes, disqualifying workers who would qualify for the same benefits in urban markets. This isn’t about red states or blue states. A nurse in rural Maine or a teacher in western Massachusetts shouldn’t be penalized by federal income caps that haven’t kept pace with statewide wages.
Shifting to statewide median income parity unlocks investment precisely where land is available and housing is desperately needed. On April 6, the IRS enacted this reform specifically for Rural Opportunity Zones.
Lower the cost of development equity. By structuring the Opportunity Zone tax benefit to deliver a 10–12% tax-free return, we can attract institutional capital from banks and insurance companies into starter home construction. This spread allows developers to lower the final sale price of a home by 15–20% while remaining profitable – making ownership achievable for the families the program is meant to serve.
Mandate a stewardship covenant. Require a five-year prohibition on renting as a condition of Opportunity Zone eligibility for for-sale homes. This ensures the homes we build create genuine owners rather than landlord-proxies and renders these properties structurally toxic to the institutional investors the Administration has already moved to sideline. A five-year liquidity lock is insurmountable for an asset management algorithm. It is not a problem for a family buying their first home.
Benefits of the reforms
Critics will point to the “cost” of tax exclusions, but these expenditures are already fully accounted for in the baseline established by the Joint Committee on Taxation. These proposals do not create new appropriations – they redirect existing, already-authorized Opportunity Zone capital from commercial assets into ownership homes, maximizing the return on a public investment already made.
The benefits extend beyond the buyers themselves: Each renter who moves into homeownership frees up a rental unit for someone else who needs it.
Single-family construction is also an important driver of jobs. Building 1,000 single-family homes creates 2,900 full-time jobs, according to the National Association of Home Builders. That’s more than double the number of jobs created for comparable multifamily projects.
With $100 billion in private capital already mobilized, the choice is straightforward: we can subsidize construction today through existing Opportunity Zone incentives, or subsidize rent forever through unfunded liabilities.
The only thing standing between this moment and five million new homes is the willingness to act with specificity.
Jonathan Tower the founder and CEO of Arctaris Impact Investors, an impact-focused Opportunity Zone fund manager.
