Affordable housing has lawmakers' attention

As New Mexico lawmakers approach the final eight days of the 2026 legislative session, a slate of housing proposals, ranging from multimillion-dollar capital outlay requests to tax incentives and regulatory reforms, is moving through the process at varying stages as part of a broader strategy to address the state’s ongoing housing affordability crisis.

Advocates say the package represents one of the most comprehensive efforts in recent years to increase housing supply, lower development costs and expand homeownership opportunities in both rural and urban communities.

Habitat for Humanity is awaiting decisions on capital outlay requests submitted to legislators, who have discretion over up to $4 million to allocate to projects in their districts.

“Every year, legislators receive a pool of funding called capital outlay, and they distribute those funds to qualifying projects,” said Roger Valdez, executive director of the Center for Housing Economics. “Habitat for Humanity has never participated in that process before, and this was the first year they did. Nine projects, eight affiliates, 71 homes, $12 million.”

All eight Habitat affiliates in New Mexico have joined forces in what supporters describe as a first-of-its-kind coordinated effort. One proposal seeks $2.5 million to fund five homes in the Metro Verde Arcadia development in Las Cruces.

“A lot of that funding would go toward infrastructure, as well as building the houses,” Valdez said. “We won’t know the level of funding each project receives until we see the capital outlay budget, which should be released in the next few days. Then we’ll be able to see who gave what to which projects. We’re hopeful the Las Cruces project will receive significant support from local legislators and could get underway later this year or early next year.”

The proposed homes would be built in communities across the state, spanning both rural and metropolitan areas.

“This is the first-of-its-kind effort by Habitat for Humanity in New Mexico,” Valdez said. “We’re encouraged by the consideration and support we’ve received so far from legislators across the state.”

Supporters argue the Habitat proposal represents a relatively modest investment that could deliver long-term stability for dozens of families through homeownership.

While capital funding could support near-term construction, several bills moving through the legislature aim to reduce systemic cost barriers that developers say have slowed production and driven up prices.

One of the most closely watched measures, Senate Bill 92, would create a Gross Receipts Tax deduction for affordable housing projects. The proposal is part of a five-bill tax package that has been folded into Senate Bill 151, which was approved by the Senate Tax, Business and Transportation Committee and now heads to the Senate Finance Committee.

The Center for Housing Economics has strongly endorsed the measure, arguing that exempting certain affordable housing activities from the state’s gross receipts tax would lower construction costs for multifamily developments.

“The GRT deduction for affordable housing will save millions in the production of affordable multifamily housing in New Mexico,” Valdez said. “The committee was wise to invest this small amount of forgone GRT revenue into significant savings for affordable housing, which will mean lower rents and more housing units.”

Because New Mexico’s gross receipts tax broadly applies to goods and services, including many construction-related transactions, developers have long argued that it compounds project costs. Supporters of the deduction say the savings would make more projects financially viable, particularly those serving lower-income households.

Another proposal with bipartisan backing would create a tax credit aimed at revitalizing vacant and abandoned properties while generating affordable housing. The legislation would offer credits to organizations that redevelop such properties, provided at least 80% of the resulting units are affordable to households earning up to 80% of area median income under the state’s Affordable Housing Act.

The size of the credit would depend on how long a property has been vacant or abandoned. The bill caps total credits at $100 million per calendar year, with at least $50 million reserved for rural areas, a provision intended to ensure smaller communities share in the benefits.

Supporters say the measure addresses multiple challenges at once: blight, underused property and housing shortages. By pairing redevelopment incentives with affordability requirements, lawmakers hope to spur private and nonprofit investment in areas that have struggled to attract capital.

Beyond tax policy, lawmakers are also weighing regulatory changes intended to speed housing production. Senate Bill 131, another measure backed by the Center for Housing Economics, would enact reforms aimed at reducing delays tied to zoning and land-use regulations. Advocates argue existing local restrictions often slow development, adding time and costs that ultimately are passed on to renters and homebuyers.

Proponents of SB 131 say increasing overall housing supply is essential to stabilizing prices. When supply is constrained, they argue, competition diminishes and costs rise, disproportionately affecting lower-income households.

“More housing means more competition among builders and housing providers, which means better prices and rents for people who need housing,” Valdez said. “When housing is in short supply, people with fewer dollars to spend on housing suffer the most.”

Taken together, the capital investments, tax incentives and regulatory reforms under consideration signal a multi-pronged approach to a problem that has grown more acute in recent years as population growth, rising construction costs and limited inventory have strained the market.

“I think because the House has reached some consensus on the tax bill, SB 151, and you’ll see that moving along over the next nine days,” Valdez said. “Then House Bill 77 — the tax credit for abandoned and vacant property — we’re hoping that will get to the tax committee quickly and then to the floor. We’ll see if we can get it out of the House and over to the Senate. Otherwise, it’s getting kind of late in the session for most of these other bills.”

Whether all of the proposals survive the legislative process remains uncertain. But the breadth of the package, spanning homeownership, multifamily development, rural investment and regulatory reform, suggests housing affordability has become a top-tier issue at the Roundhouse.

For advocates and lawmakers alike, the coming days will determine how much of that agenda becomes law — and how quickly New Mexico families might see relief in an increasingly competitive housing market.