Affordable Housing Crisis: States Scramble to Preserve Units as Affordability Protections Expire

The U.S. is facing a growing affordable housing crisis, with rents soaring and a shortage of units affordable to low-income families. Adding to the challenge, thousands of existing affordable housing units are at risk of converting to market-rate rents as affordability restrictions tied to a key federal program expire.

The Low-Income Housing Tax Credit (LIHTC) program, created in 1986, has been instrumental in developing affordable housing nationwide. This program provides tax credits to developers who agree to keep rents below market rates for a specified period, typically 30 years.

However, as these affordability restrictions begin to expire, many low-income tenants are facing the prospect of sharp rent increases, eviction, or displacement from their homes. An estimated 223,000 LIHTC units could lose their affordability protections in the next five years alone, exacerbating the existing housing crisis.

This situation is particularly concerning given the surge in rental costs in recent years. Many low-income families are already struggling to afford housing, and the loss of these affordable units could push them further into financial hardship.

States are scrambling to find solutions to preserve these units and prevent a mass exodus of low-income renters. Several approaches are being pursued:

• Purchasing Expiring Properties: Local governments and non-profit organizations are attempting to purchase expiring LIHTC properties to maintain their affordability. However, this approach requires substantial funding and faces competition from private investors.
• Extending Affordability Through New Tax Credits: Existing LIHTC properties can be granted new tax credits, extending their affordability period. However, the availability of these credits is limited, and states must compete for allocations from the federal government.
• Tenant Organizing and Advocacy: Tenant groups are organizing to pressure landlords and city officials to take action to preserve affordable housing.

Despite these efforts, the loss of LIHTC units is creating a significant gap in affordable housing options, forcing low-income families to compete in an increasingly expensive rental market.

Key Takeaways:

• Thousands of affordable housing units across the U.S. are at risk of converting to market-rate rents as affordability restrictions under the LIHTC program expire.
• The expiration of these protections is exacerbating the existing affordable housing crisis, pushing low-income renters into an already strained rental market.
• States are pursuing various strategies to preserve these units, including purchasing expiring properties, extending affordability through new tax credits, and supporting tenant advocacy efforts.

The expiration of LIHTC affordability restrictions underscores the need for a comprehensive and sustained approach to addressing the affordable housing crisis in the U.S. Policymakers at all levels of government must prioritize the development and preservation of affordable housing, ensuring that low-income families have access to safe and stable housing options.