Mercy Housing recently opened a first-of-its kind affordable housing community in Washington.
Located in SeaTac, the 130-unit development is a model for integrated permanent affordable housing with supportive services for people with intellectual and developmental disabilities (IDD) and their families. With 26 homes designated for this population, Connection Angle Lake is the first affordable housing development in the state focused on the IDD community.
The organization teamed with co-developer The Arc of King County, a nonprofit advocating for people with IDD, on the project. It is one of the many impactful projects that Mercy Housing advanced last year.
In 2025, the organization started construction on eight projects with 770 affordable housing units, making it the top nonprofit and No. 22 on the AHF 50 list of developers. It also completed nine properties with more than 900 affordable housing units last year.
In addition, Mercy Housing is No. 8—and the top nonprofit—on the AHF 50 owners list with 26,437 units nationwide as of Jan. 1.
With the country’s affordable housing crisis continuing to grow, the organization is far from done. A 10-year vision for Mercy Housing seeks to double the size of its portfolio to about 50,000 units and to serve close to 100,000 people.
To reach its ambitious goal, it plans to diversify its housing pipeline with a broader mix of properties serving a wider range of populations. For the past decade, Mercy Housing has focused on new construction projects, specifically low-income housing tax credit (LIHTC) developments. This will continue to be an important part of its work in its existing footprint as well as in new markets. Mercy Housing recently submitted its first LIHTC applications for projects in Tulsa, Oklahoma, and Bentonville, Arkansas.
The organization projects starting construction on 12 new developments with approximately 1,300 affordable housing units this year.
Moving forward, the nonprofit also plans to expand its preservation and acquisition efforts, including buying existing affordable and naturally occurring affordable housing properties.
The organization’s Future Pipeline Framework also seeks to make sure the growth is financially sustainable so it will be looking at expanding its portfolio to serve residents at slightly higher—60% to 80%—area median incomes (AMIs).
“This makes the overall portfolio a little more balanced, with healthier operating margins and stronger cash flow,” says president and CEO Ismael Guerrero.
He and his team have adopted a saying—more margin means more mission.
The margin is what allows the organization to invest in resident services and to recapitalize older properties. Last year, Mercy Housing exceeded its portfolio net operating income margin target by 5%, reports Guerrero, noting that a focus is to improve corporate margins this year.
“It’s to build a more resilient organization by saying the bottom line really matters,” he says. “For a nonprofit, the bottom line is what creates the resources for us to invest in resident services and innovation. We’re stronger because we have that focus.”
Going into 2026, Mercy Housing also made several organizational changes, including creating a new executive position—chief of portfolio strategy and operations. It also consolidated a number of corporate functions under different leaders, including combining property management and asset management functions to be more strategic about its sizable portfolio.
In another move, it established a Presidents Council to better align the heads of Mercy Housing’s regional offices with its central headquarters.
“We’re a national organization, but we show up very locally,” Guerrero says. “We have a strong local presence, and our five regional offices—California, Northwest, Mountain Plains, Lakefront, and Southeast—are led by local presidents and have local staff. That lets us be very responsive.”
To be even stronger, the new council regularly brings together the presidents along with the executive team to coordinate strategy, share best practices, and work on executing priorities.
“Mercy Housing demonstrates what’s possible when national scale is paired with deep local partnership and long-term stewardship,” says Theresa Dumais, CEO of Stewards of Affordable Housing for the Future. “Their model shows that housing stability is strongest when high-quality real estate is intentionally integrated with resident services and community support. Mercy Housing has proven that scale and mission alignment are not in tension—they can reinforce one another to deliver lasting impact.”
Building Resilience
Looking ahead to the rest of the year, Guerrero says it will be another challenging period for the industry, largely because of its unpredictability. There continue to be wide differences between the administration and congressional budgets for housing programs. In addition, rising oil prices, growing inflation, and other factors threaten to disrupt the overall economy.
“The external factors that we don’t control could have a significant impact,” he says. “We’re proceeding cautiously. We’re investing in our growth. We’re investing in our programs. We feel confident, but with an eye toward risk management and how we prepare for uncertainty.”
In an environment where operating costs are continuing to rise, Mercy Housing and other affordable housing providers are constrained in their ability to grow revenue. Unlike market-rate apartment owners, they can’t just raise rents.
Instead, an area that Mercy Housing is looking to improve on is controlling costs. This includes improving economic occupancy at properties with lower vacancies, quicker turnarounds, fewer evictions, and more support for residents, according to Guerrero.
“But, we have to recognize that our residents are struggling,” Guerrero says. “They are facing challenges. They’re seeing cuts in Medicaid. They’re seeing cuts in food benefits and child care subsidies. While we can control the cost of housing, we can’t control the cost of living. Our residents are being impacted by so many changes in policies and priorities. We have to think about how residents can stay stably housed, how they can have economic opportunities. While housing funding continues to be a priority, we’re seeing that with some of the appropriations and the tax bill, the social safety net that the residents, especially the more vulnerable aging seniors and people with special needs, rely on to make ends meet are being dismantled and disinvested in. That’s something from an advocacy, policy, and programmatic level we have to continue to focus on.”
That’s why the organization has been working on more resident outreach through new surveys and communication to learn what they need. It’s led to increased efforts around housing stability, including eviction prevention and connecting residents to resources to stay housed.
After leading the Denver Housing Authority for 13 years, Guerrero took over the top post at Mercy Housing during the COVID pandemic in 2020. One of the lessons that the industry learned post-COVID is that if your portfolio is very local or focused on serving one type of population, you may be less resilient to major disruptions.
As a result, other organizations may look to diversify and create a more balanced portfolio like Mercy Housing is doing. It’s one of the ways the sector may evolve.
“I think the growth opportunities seem to be in recognizing that the affordable housing crisis is broader than it used to be, so doing more mixed-income housing is definitely something we are pursuing, 60% to 80% AMI, and in some high-cost markets maybe up to 100% AMI because there’s a need,” Guerrero says. “We need to get at it. We need to add more supply to serve that need. We need to build more of it. We need to build it faster. We need to build it cheaper.”