Where Are Affordable Housing Units at Greatest Risk of Expiring?

May 16, 2017                              By:  Bill Kitchens

Across the nation, there is large shortfall of Low Income Housing Tax Credit, or LIHTC, units. Shortages of designated affordable housing are even more severe in certain metro areas. Another component to the scarcity issue is the expiration of the tax break associated with the LIHTC. Again, certain metros are more vulnerable than others to expiring LIHTC units.

In order to receive the LIHTC tax break, a property must adhere to a rent level affordable relative to a metro area’s median income, specified by the U.S. Department of Housing and Urban Development. The tax credit used to finance or rehab the property expires after 15 years, at which time the tax credit can be extended. However, if the credit is not extended, asking rents could rise to the market level. (In some cases, these units can already be supported by multiple subsidies and still be deemed affordable). The issue of expiration takes time to address. For example, units expiring in 2017 were issued around 2002, so there is a significant time lag between newly financed units and pulling enough reliable data to help answer the expiration question....................Read More