We talk a lot about rising costs in affordable housing, but ๐ญ๐ก๐ข๐ฌ ๐๐ซ๐๐๐ค๐๐จ๐ฐ๐ง ๐๐ซ๐จ๐ฆ ๐ญ๐ก๐ Yardi ๐๐จ๐ง๐๐๐ซ๐๐ง๐๐ ๐ฅ๐๐ฌ๐ญ ๐ฐ๐๐๐ค ๐ซ๐๐๐ฅ๐ฅ๐ฒ ๐ก๐ข๐ญ ๐ก๐จ๐ฆ๐.
Every so often, a chart or a dataset comes along that stops you in your tracks. At last weekโs Yardi conference, one particular breakdown of operating costs in affordable housing did exactly that for me.
We all know costs are rising, thatโs not news. But when you see every single expense category moving upward at once, and then remember that rental income in affordable housing is capped by Area Median Income (AMI), the reality hits hard. The margin for operational success isnโt just narrowing, itโs disappearing.
The New Cost Reality
Hereโs what the Yardi data showed:
Insurance costs are up 6.2 percent year over year.
Utilities jumped 4.8 percent.
Payroll, the single largest category, accounting for roughly a quarter of total costs rose another 4.2 percent.
Even categories many would dismiss as โsmallerโ line items, like marketing, saw a 12.3 percent spike.
The total result? Operating expenses per unit now sit at $8,555 annually. Thatโs a 4.2 percent increase in a single year, and it doesnโt even include capital needs, deferred maintenance, or reserves.
As someone who has spent more than two decades guiding operations across multifamily portfolios, I can tell you: when the math looks like this, no amount of goodwill or hustle from your teams can erase the fundamental imbalance.
Why This Is Different
Cost increases in real estate arenโt new. But in affordable housing, the difference is stark: your income side is fixed. You canโt simply raise rents to offset rising expenses. Your revenue is tied directly to AMI calculations, which often lag behind real-world inflation.
Meanwhile, your residents are already stretched. Wages havenโt kept pace with living costs, and in many cases, affordable housing is their last refuge of stability. Passing costs along isnโt an option, not morally, not operationally.
This creates what I call the โpressure cookerโ environment. Owners feel the financial squeeze. Site teams carry heavier workloads. Residents face higher stress as service levels strain. And all of this happens against a backdrop of deferred maintenance and underfunded reserves, which only compounds long-term risk.
What It Looks Like on the Ground
Iโve watched this play out in real time. At one property, payroll increases meant we couldnโt backfill a vacant position for several months. The site team stretched to cover the gap, and while they held things together admirably, resident satisfaction dipped within 60 days. At another, rising insurance premiums forced ownership to cut back on resident programming. The unintended consequence? Turnover spiked, wiping out any savings.
The numbers in the Yardi report arenโt abstract, theyโre lived experiences for teams across the country. They show up as staff burnout, slower response times, deferred maintenance calls, and tougher decisions in budget meetings.
What Leaders Can Do
So what can we do when the math doesnโt work? The answer isnโt simple, but there are practical levers leaders can pull.
Streamline operations. This isnโt about cutting corners, itโs about leveraging smart systems and automation to reduce duplication and manual effort. Iโve seen portfolios save thousands of hours by implementing better workflows in vendor management, compliance, and maintenance. Those hours translate directly into staff capacity and resident experience.
Advocate for flexibility. Whether itโs pushing for more responsive AMI adjustments, streamlined tax credit reviews, or new insurance solutions, leaders must use their voice beyond the property level. The policy environment has to reflect the economic reality operators face, or the system will continue to break.
Share data transparently. Too often, these issues are addressed in silos. Operations talks about staff burnout. Ownership focuses on NOI. Compliance zeroes in on audit results. By putting the full cost picture on the table, across departments, we align around the same truth and can collaborate on real solutions.
Invest in people. This may be the most important point of all. At the end of the day, itโs site teams who absorb the brunt of these pressures. Theyโre the ones answering the phones, walking the units, and talking to residents who feel the squeeze. Supporting, training, and retaining them is not optional itโs the only way to sustain operations in this environment.
Balancing Mission and Math
Affordable housing has always been mission-driven work. It attracts people who believe deeply in community, in stability, and in equity. But mission alone doesnโt keep the lights on. The math has to work. And right now, the math is strained to the breaking point.
That tension, between mission and math, is where leadership matters most. We have to be clear-eyed about the financial realities while holding firm to the values that brought us into this work. That means making tough calls, but also pushing relentlessly for systemic solutions.
The Call to Action
The Yardi data was a reminder, not a revelation. Costs will keep climbing. AMI caps will keep limiting revenue. And unless we get serious about addressing the cost side of the equation, the pressure cooker will only intensify.
The challenge Iโll pose is this: whatโs one step you can take in your organization this quarter to relieve the pressure? Maybe itโs a technology investment that eliminates wasted staff time. Maybe itโs a conversation with policymakers about insurance reform. Maybe itโs simply sitting down with your team and asking how rising costs are showing up in their day-to-day work.
Big solutions will require industry-wide collaboration. But small steps, taken consistently, create resilience at the property and portfolio level.
Because if thereโs one thing Iโve learned in 20-plus years of multifamily leadership, itโs this: numbers may set the boundaries, but people determine whether we succeed within them. Our job is to make sure those people have the tools, support, and clarity they need to carry the mission forward, even when the math doesnโt seem to add up.
