As California grapples with one of the worst housing affordability crises in the nation, the question on the minds of many is what happens to affordable housing if federal funding disappears?
The Trump administration’s budget proposals and recent trade policies are sending shockwaves through the already fragile foundation of low-income housing in California and beyond.
From proposed cuts to the U.S. Department of Housing and Urban Development (HUD) to the uncertain future of Section 8 housing vouchers and rising construction costs fueled by new tariffs, the system is approaching a dangerous tipping point.
For millions of families in California, the next year could mean the difference between having a roof over their heads and facing eviction, displacement, or homelessness.
In cities like San Francisco, the federal Housing Choice Voucher Program—commonly known as Section 8—has long served as a last line of defense against homelessness for the most vulnerable residents.
These vouchers allow low-income families to pay no more than 30% of their income on rent, with the government covering the rest. In a market where the median rent for a one-bedroom apartment in San Francisco hovers above $3,000, this kind of support is not just helpful—it’s lifesaving.
But that safety net is now fraying.
According to a recent report from The San Francisco Chronicle, while Section 8 funding received a temporary bump in a recent stopgap federal budget, the longer-term outlook is bleak.
Uncertainty reigns as the Trump administration signals it may pursue cuts to HUD in the coming fiscal year, echoing the slashes it attempted during his first term.
Local housing authorities are already alarmed. San Francisco’s Housing Authority has closed its waiting list and signaled that no new Section 8 recipients will be served under current funding levels. In Los Angeles, the Housing Authority paused the processing of thousands of applications due to federal budget uncertainty.
When Section 8 funding falters, many families already living paycheck to paycheck (if they have one) fall through the cracks. They are often forced move into shelters, cars, or encampments. In some neighborhoods, like Bayview-Hunters Point, as many as one in three households rely on vouchers.
What happens when those vouchers run dry?
While the federal government pulls back its commitment to affordability through HUD cuts, President Trump’s escalating trade war is exacerbating the housing crisis from another angle: the supply side.
As Next City reported earlier this month, tariffs on construction materials like steel, lumber, aluminum, and home appliances are raising the cost of new housing development across the country. For affordable housing developers already struggling to “make the math pencil out,” this could be the final blow.
Developers like Monica Martinez of The Fax Partnership in Denver have already begun postponing or scrapping affordable housing projects due to escalating costs and uncertainty. Her group is working on a 110-unit workforce housing project, but between skyrocketing construction expenses and looming HUD cuts, the deal no longer looks viable.
In California, where the cost of land, labor, and materials already presents enormous challenges to affordable housing construction, Trump’s tariffs could add $10,000 or more to the cost of building a single home. Multiply that across thousands of units, and the math becomes unsustainable—especially for nonprofit and mission-driven developers dependent on narrow funding margins and public subsidies.
Just as troubling as the cuts to programs like Section 8 and the ripple effects of tariffs is the Trump administration’s plan to cut HUD’s workforce by 50%. That means slashing the staff responsible for processing rental subsidies, administering fair housing complaints, and overseeing the very programs keeping millions of people housed.
According to a Washington Post report cited in The Chronicle, HUD may lose more than 4,000 employees under Trump’s proposed budget. That’s more than half its workforce.
The ramifications go beyond simple delays. HUD’s ability to respond to disaster recovery, maintain public housing stock, and enforce civil rights laws will all be compromised. Programs like the Green and Resilient Retrofit Program, which aimed to modernize and preserve tens of thousands of affordable housing units, have already seen over $1 billion in grants frozen. The cancellation of Section 4 capacity-building grants for nonprofits could halt affordable housing development in hundreds of low-income and Tribal communities nationwide.
In California, where local governments and nonprofits rely on federal partners to fill gaps in the housing market, the loss of this capacity could paralyze progress. Enterprise Community Partners estimates that HUD’s cuts could disrupt 44,000 planned housing units in California alone—units that are already shovel-ready and waiting for final funding approvals.
The justification for these cuts has largely rested on a familiar refrain: fiscal responsibility. But the truth is, these are not cost-saving measures—they are ideological choices.
Consider that while HUD funding is on the chopping block, the Trump administration continues to push for expansive tax cuts for corporations and high-income earners. It is also prepared to spend billions on tariffs that raise prices for American consumers and businesses alike. In that light, the decision to cut housing programs looks less like prudence and more like cruelty.
As Ben Metcalf, former HUD official and current managing director at the Terner Center for Housing Innovation at UC Berkeley, put it: “Section 8 is this last support network for the most vulnerable subset. Even though it’s not a huge share of total renters, it just matters a ton.”
If we strip that last support away, the social and economic costs will be immeasurable: more homelessness, more children living in cars, more seniors forced into unsafe housing, more emergency room visits, more despair.
There is still time to change course. Congress must reject proposed cuts to HUD and resist further tariffs that make housing more expensive to build. States like California need to redouble their own commitments to affordable housing, but they cannot do it alone. Federal partnerships, particularly for programs like Section 8 and low-income housing tax credits, remain essential.
It’s time to implement universal basic income (UBI), which even Musk apparently supports.
The advantage of UBI is that it presumably won’t “trap” people in their current circumstances. (Unlike government programs that disincentivize personal initiative.)