A new report by the U.S. Department of Housing and Urban Development (HUD) has determined that the vast majority of the 2.2 million apartments created between 1987 and 2006 via the nation's Low-Income Housing Tax Credit (LIHTC) program will remain affordable for working families after the program's initial 15-year required ‘affordability period’ expires.
However, the HUD-commissioned report cautions that once all additional state and local use restrictions expire in the years to come, more than a million units of affordable housing could become market-rate properties that lower income families may no longer be able to afford.
According to HUD's report, most of the older LIHTC properties are not at risk of becoming unaffordable. However, there are notable exceptions: properties with for-profit owners located in favorable market locations. HUD created a worst-case scenario and found that more than a million LIHTC units could leave the affordable housing stock by 2020, a potentially serious setback for efforts to provide housing for low-income households.Â
‘This report is a wake-up call to all of us interested in preserving our nation's affordable housing," says HUD Secretary Shaun Donovan. ‘As LIHTC properties age, especially in high-cost areas with escalating market demand, state housing finance agencies must do everything they can to protect the opportunities for working families to live in neighborhoods they might otherwise not be able to afford.’
The report suggests that state housing finance agencies should place the highest priority on the developments that are most likely to be repositioned in the market, either as higher-rent housing or conversion to homeownership or another use.