In the heart of Southwest San Antonio, a significant affordable housing project is set to take shape, even as high interest rates slow down large construction projects in the region. Dominium, a national affordable housing developer with a history dating back to 1972, is preparing to build a 404-unit housing complex off Quantum Drive. This development comes at a time when apartment construction has plummeted by nearly 90% compared to four years ago, according to data from real estate research firm CoStar.
Dominium’s Vision for Affordable Housing in San Antonio
Dominium’s project, known as the Silo, will consist of 14 apartment buildings offering one-, two-, three-, and four-bedroom units, with a particular focus on larger units to accommodate families. The development is designed to serve individuals and families making at or below 60% of the area median income (AMI), with annual incomes of up to $60,360 for a family of four. Rents are estimated to range between $1,100 and $1,700 per month, depending on the unit size. Additionally, 10% of the units will be reserved for families at 30% AMI, with an annual income of about $30,200 for a family of four.
The Silo will feature a clubhouse, pool, and playground, providing a community-oriented living environment. Opportunity Home San Antonio, the city’s housing authority, is collaborating with Dominium on this project by issuing tax-exempt bonds and purchasing the land. Tim Alcott, the organization’s executive vice president of development, emphasized the critical need for such income-restricted housing. “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 stated.
Navigating Market Challenges in Multifamily Development
The Federal Open Market Committee’s decision to keep interest rates steady in June to combat inflation has created a challenging environment for developers. Danny Khalil, an associate director of market analytics for CoStar, noted that lower interest rates post-COVID-19 pandemic had spurred construction, with 12,500 units breaking ground in 2026 and 9,000 in 2026. However, as interest rates have risen, construction has decreased significantly. In the first half of 2026, only 660 units were started, putting 2026 on track for just 10.5% of the units that broke ground four years ago.
Khalil also highlighted that the construction boom of the early 2020s has led to an oversupply of new apartments, driving down rents. This situation makes investors hesitant to fund new projects or purchase completed ones. “That model is encountering difficulties. Market rate rents are falling,” Khalil said. “That looks to banks and lenders like potential risk.” However, affordable housing developments often receive subsidies, making them exceptions in the current market.
Dominium’s Strategy for Success
Despite the challenges, Dominium remains committed to its project in San Antonio. JT Marting, a Dominium development analyst, explained that the company receives subsidies from the federal government based on the project’s construction costs. These subsidies help insulate Dominium from the impact of higher interest rates. “We receive a subsidy from the federal government. That is based on how much your project costs to build,” Marting said. He also noted that while bank loans may be smaller due to high interest rates, Dominium’s long-term ownership and management strategy allows the company to stretch out its financial plan over more than a decade.
Alcott emphasized that while San Antonio has seen a temporary oversupply in luxury, market-rate apartments, there remains a severe deficit in truly affordable units. The Silo project, expected to be completed in two to three years, will directly address this need. “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,” he said.
Expanding Affordable Housing in San Antonio
Dominium’s decision to build in San Antonio is driven by the city’s population growth and the pressing need for more affordable housing. The company aims to provide units that are $100 to $400 cheaper than market rent and plans to expand its presence in other parts of the city. “We’re excited to come to San Antonio,” Marting said. “Our goal is to build in a community where our residents otherwise wouldn’t be able to afford to live.”
As Dominium prepares to break ground on the Silo project, it stands as a beacon of hope in a challenging market, demonstrating the importance of affordable housing developments in supporting the needs of growing communities.
