The Looming Affordable Housing Cliff: Millions at Risk as Affordability Protections Expire

A hidden crisis is brewing within the U.S. housing market: the looming expiration of affordability protections for hundreds of thousands of low-income housing units. As the deadlines approach for a wave of properties built under the Low-Income Housing Tax Credit (LIHTC) program, a wave of displacement and financial hardship threatens millions of Americans already struggling with skyrocketing rents.

The LIHTC program, established in 1987, has been a cornerstone of affordable housing development, generating over 3.6 million units nationwide. The program incentivizes private developers to create and maintain affordable housing by offering them tax credits in exchange for keeping rents below market rates for a specified period, typically 30 years.

However, as those 30-year deadlines arrive for a large cohort of LIHTC properties developed in the 1990s, a critical question arises: What happens to the affordability of those units and the families who rely on them?

The answer is complex and varies from state to state. While some states have implemented measures to preserve the affordability of expiring LIHTC units, including extending affordability periods, providing additional subsidies, or granting purchase rights to local governments and non-profits, many states lack such safeguards.

This inconsistent approach has created a patchwork of policies, leaving a significant portion of LIHTC units vulnerable to conversion to market-rate rents. The National Housing Preservation Database estimates that approximately 350,000 LIHTC units are at risk of losing their affordability protections by 2030, and that number could surge to one million units by 2040.

The potential consequences of this “affordable housing cliff” are dire. Low-income families, already struggling to afford housing in a market where rents are soaring, could face sharp rent increases, eviction, or displacement. This would further exacerbate the nation’s housing crisis and deepen existing inequalities.

Key Takeaways:

• Hundreds of thousands of affordable housing units built under the LIHTC program are at risk of losing their affordability protections in the coming years.
• This “affordable housing cliff” threatens to displace vulnerable families and worsen the existing housing crisis.
• State-level policies for preserving these units vary widely, creating a patchwork of protections and leaving many families at risk.

The looming expiration of LIHTC affordability restrictions demands a comprehensive and urgent response from policymakers. Proactive measures, such as extending affordability periods, providing additional subsidies, and prioritizing the acquisition of expiring properties by mission-driven organizations, are essential to preventing a wave of displacement and ensuring that safe and affordable housing remains accessible to all Americans.