A national affordable housing developer is building its first project in San Antonio at the same time as high interest rates are making large construction projects less common in the region.
Dominium, an affordable housing developer founded in 1972 that’s built thousands of homes nationwide, is set to begin construction on a 404-unit housing project off Quantum Drive in Southwest San Antonio.
The effort comes as developers are building almost 90% fewer apartments than they were four years ago, according to data provided by real estate research firm CoStar.
The developer plans to start construction by the end of the year and could finish the project in 2 to 3 years, said JT Marting, a Dominium development analyst. Marting added that the 14 apartment buildings at the site, collectively known as the Silo, will feature one-, two-, three- and four-bedroom units, with a focus on larger units for families.
A majority of the project will be for people making at or below 60% of the area median income (AMI) — an annual income of $60,360 for a family of four. Rents would be between $1,100 and $1,700 a month, depending on unit size, Marting estimated.
He added that 10% of units could be set aside for families at 30% AMI, about $30,200 a year for a family of four. The project will have a clubhouse, pool and playground.
Opportunity Home San Antonio, the city’s housing authority, is working with Dominium on the project by issuing tax-exempt bonds and purchasing the land for the development. Tim Alcott, the organization’s executive vice president of development, said there was a staggering need for affordable units.
“Constructing dedicated, income-restricted housing here serves as a vital anchor, allowing long-term residents to remain in their historic community rather than being priced out.” Alcott said.
Opportunity Home has worked on other large projects over multiple phases, but Alcott said the 404-unit complex is the housing authority’s largest tax-credit development built all at once.
Challenges in multifamily development
Dominium is coming to town as high interest rates are discouraging many developers from starting construction. The Federal Open Market Committee, which sets monetary policies that play a large role setting interest rates, announced it would keep its rates steady in June to focus on fighting inflation.
Danny Khalil is an associate director of market analytics for real estate research group CoStar who focuses on San Antonio. He said lower interest rates after the COVID-19 pandemic spurred construction. In 2022, 12,500 units broke ground and in 2023, 9,000 started construction.
As interest rates have risen, though, construction has decreased. In the first half of 2026, Khalil said, developers broke ground on 660 units. That puts 2026 on track for 10.5% of the units that broke ground four years ago.
The construction boom of the early 2020s also means there are lots of new apartments competing for residents, Khalil said. That’s driving down rent.
That can make investors less inclined to put money in to support a project or to buy it when it’s completed.
“That model is encountering, shall we say, difficulties. Market rate rents are falling,” Khalil said. “That looks to banks and lenders like potential risk.”
Affordable housing is one of the exceptions, Khalil said, because it often receives subsidies.
“What we’re seeing, not just in San Antonio, but regionally and nationally, is that different affordable housing developers are some of the most active builders at the moment,” Khalil said.
Marting said that Dominium still feels the pinch of higher interest rates, but tax incentives the company gets to build affordable housing help insulate it.
“We receive a subsidy from the federal government,” Marting said. “That is based on how much your project costs to build.”
When interest rates go up and projects get more expensive, the incentives offered through the federal Low Income Housing Tax Credit keep up.
Marting added that bank loans do get smaller because of high interest rates — it’s still harder for Dominium to put together the capital needed for projects like the Silo. But Dominium will own and manage projects for 15 to 30 years. That means the company doesn’t need to make money as soon as construction ends, he said, it’s comfortable stretching out its financial plan over more than a decade.
Alcott said Opportunity Home is waiting in the wings — the housing authority has right of first refusal when Dominium decides to sell the property in the future. He also noted that the housing boom of the early 2020s was focused on luxury units and market rate apartments.
“While San Antonio has recently seen a temporary oversupply in luxury, market-rate apartments, there remains a severe, historic deficit in truly affordable units,” he said. “Because this property will come online in two to two and a half years, it gives the broader market time to stabilize while directly targeting the exact type of housing our growing city desperately needs most.”
Marting said Dominium was attracted to San Antonio because of its population growth and the need for more affordable housing. The company targets areas where it can provide units that are $100 to $400 cheaper than the market rent and it plans to build in other parts of the city.
“We’re excited to come to San Antonio,” he said. “Our goal is to build in a community where our residents otherwise wouldn’t be able to afford to live.”
Source:
San Antonio Report
