The federal government shut down on Wednesday—the first lapse since 2019—with no deal in sight. Both chambers are at an impasse after dueling stopgap funding bills failed again this week. (AP News, Oct. 2)

State of Play

• Senate Democrats blocked Republicans’ “clean” Nov. 21 continuing resolution (CR). Republicans rejected Democrats’ version that included extending enhanced Affordable Care Act subsidies and reversing Medicaid cuts.

• Senate Majority Leader John Thune (R-SD) and Minority Leader Chuck Schumer (D-NY) may meet Friday in their first one-on-one since the standoff began. Another round of votes is planned for Friday. (Punchbowl News, Oct. 2)

• If Democrats block the GOP plan again, Majority Leader Thune is expected to adjourn the Senate until Monday, canceling Saturday votes, and force another vote on Monday. (Punchbowl News, Oct. 2)

• In response to the shutdown, OMB Director Russ Vought has stopped funding for the Hudson Tunnel Project and the Second Avenue Subway in New York City and canceled energy projects in several states. (NYT, Oct. 1)

CRE Impact

• NFIP: The National Flood Insurance Program (NFIP) cannot issue new policies or renewals during the shutdown, threatening thousands of real estate transactions. The Real Estate Roundtable (RER) supports a long-term, sustainable NFIP reauthorization to avoid recurring market disruptions. (Roundtable Weekly, Sept. 19)

• Senate Banking Committee Chair Tim Scott (R-SC) “remains committed” to funding the program and is “optimistic” Democrats will join Republicans to prevent a lapse in coverage during peak hurricane season, his spokesperson said. (Politico, Sept. 30)

• Energy: The ENERGY STAR program has halted partner application processing, product list updates, and specification releases—stalling efficiency certifications important to building owners and tenants. Meanwhile, it remains unclear how the shutdown will affect EPA Administrator Lee Zeldin’s broader reorganization and regulatory timeline. (PoliticoPro, Sept. 30, Oct. 1 | NAHB, Oct. 1)

• Housing: HUD is unable to access certain funds used to prevent evictions in its Tenant-Based Rental Assistance Program. Affordable housing initiatives also face delays due to the furloughing of program staff. (Politico, Sept. 30)

• Construction: Fallout from the shutdown is also reverberating through the construction sector, where contractors warn that halting federal projects will ripple into private markets by raising costs and eroding confidence. (UtilityDive, Oct. 1)

• Tax Policy & Treasury: Despite the shutdown, Treasury has said it will continue implementing President Trump’s tax law and deregulatory agenda, relying on multi-year funding streams. Its tax policy office will remain active, advancing the president's tax cuts and regulatory rollbacks. Other Treasury operations—including debt management, collections, and oversight of financial markets will also continue. (PoliticoPro, Sept. 29)

• “Government shutdowns and temporary extensions of essential programs like the NFIP create avoidable uncertainty that disrupts real estate markets and undermines economic confidence,” said RER President & CEO Jeffrey DeBoer. “Congress should act responsibly by providing long-term solutions that protect communities and the American people, encourage investment, and sustain growth.”

As the shutdown continues, mounting strain on real estate transactions, insurance coverage, and investment planning will intensify pressure on Congress to resolve the impasse.

The Treasury Department and Internal Revenue Service (IRS) this week issued Notice 2025-50, providing guidance on Opportunity Zone (OZ) investments in rural areas under the One Big Beautiful Bill (OB3) Act. The notice designates 3,309 census tracts—about 38% of the OZ map—as rural, giving investors and developers clarity on how the new rules apply. (IRS, Sept. 30)

New Guidance

• Rural definition: Any census tract outside a city or town with a population greater than 50,000—and not an adjacent urbanized area—qualifies as rural. (BisNow, Oct. 1)

• 3,309 tracts designated: The notice identifies 3,309 rural OZ census tracts, representing about 38% of all OZs designated in 2018.

• Lowered improvement threshold: Effective July 4, 2025, real estate projects in rural OZs must meet a more manageable 50% substantial improvement test—down from 100%—to qualify for OZ tax benefits. The substantial improvement test governs the level of new investment required, relative to the cost of the property.

• The guidance applies only to the current OZ map. Treasury said definitions for future OZ designations, which will take effect in 2027, will be addressed separately. (PoliticoPro, Sept. 30)

• The latest guidance enhances certainty for investors and developers seeking to expand housing and economic opportunity in rural America.

Roundtable Advocacy

• The Real Estate Roundtable (RER) has long championed OZs as a transformative tool to drive economic growth and increase affordable housing in underserved communities. (Roundtable Weekly, April 4)

• RER members have used OZ capital nationwide to finance multifamily housing, mixed-use developments, and life sciences facilities that support job creation and local tax revenues.

• The OB3 Act permanently extended OZ tax incentives and enacted key reforms. (OB3 Act Fact Sheet):

• At the American College of Real Estate Lawyers (ACREL) Annual Meeting recently, RER President and CEO Jeffrey DeBoer and SVP & Counsel Ryan McCormick addressed the enhanced role of OZs in revitalizing communities. (Watch Video)

• This week, RER's Opportunity Zone Working Group met virtually with staff from Sen. Tim Scott (R-SC) office, the leading Congressional sponsor and advocate of OZs, to discuss next steps in the implementation of the OZ reforms and enhancements.

Why It Matters

• Since 2017, OZs have spurred more than $120 billion in investment—much of it directed toward new housing, helping to expand supply, create jobs, and revitalize economically distressed areas.  (RER Annual Report 2025)

• Housing impact: OZs accounted for 20% of all new multifamily units in 2023, up from 8% when the program began. (ULI, Sept. 22)

• Economic impact: OZ incentives nearly doubled housing production in designated tracts from 2019 to 2024, generating more than 313,000 new residential addresses at relatively low fiscal cost. (Economic Innovation Group, March 11)

RER’s Tax Policy Advisory Committee (TPAC) and Opportunity Zone Working Group will continue to evaluate OZ changes, address technical issues, and ensure the industry’s voice is heard as Treasury and IRS implement the new law.

The Trump administration announced new trade measures this week aimed at building materials. The plan imposes a 10% duty on imported softwood lumber and a 25% tariff on kitchen cabinets and vanities—set to rise to 50% in 2026. The added cost burden threatens to ripple through the housing market, raising barriers to affordability at a time of heightened demand. (White House, Sept. 29) (NYT, Oct. 2)

State of Play

• The new tariffs come on top of existing surcharges, marking a sharp escalation in trade measures against foreign suppliers of housing and construction products. (GlobeSt. Oct. 1)

• President Trump's tariff proclamation found that current wood imports “are weakening our economy, resulting in the persistent threats of closures of wood mills and disruptions of wood product supply chains” and putting at risk the United States’ ability “to meet demands for wood products that are crucial to the national defense and critical infrastructure.” (White House Action, Sept. 29)

• Analysts warn that the tariffs could exacerbate the housing shortage by slowing construction, and, combined with earlier steel and aluminum tariffs, undermine the momentum that Fed rate cuts might otherwise provide. (NYT, Oct. 2)

• The U.S. imports roughly one-third of the lumber it consumes because domestic production cannot meet demand. Canada supplies nearly 85% of U.S. lumber imports. (NAHB, Sept. 30)

CRE & Affordable Housing

• Tariffs may present several challenges for commercial real estate, including increased construction costs, potential project delays, and heightened uncertainty among investors. (CBRE, March 19 | Roundtable Weekly, April 4)

• “These new tariffs will create additional headwinds for an already challenged housing market by further raising construction and renovation costs,” said National Association of Home Builders (NAHB) Chairman Buddy Hughes.

• Builders caution the measures will add to affordability pressures for renters and homebuyers already facing tight supply. (CRE Daily, Oct. 1)

• Last month, it was reported that President Trump may declare a national housing emergency this fall. (Roundtable Weekly, Sept. 12)

• As part of the broader effort to address the nation’s housing shortage, property conversions are gaining momentum. Manhattan alone launched 4.1 million square feet across 15 projects through August 2025, the fastest pace since 2008, according to a recent Cushman & Wakefield report. (GlobeSt., Oct. 2)

• RER urges federal policymakers to support incentives for these transformative projects, helping to meet the nation’s growing housing demand. (RER Annual Report - Housing 2025)

RER will continue to engage with policymakers to reduce regulatory burdens and eliminate other obstacles that are impeding development and expand America’s housing infrastructure.