Making Affordable Housing Work
by David Levine, President/CEO
In this Bloomberg article, the true costs of building affordable housing are detailed to the last dollar — with the help, too, of an interactive and very clever cost calculator. What becomes clear is this point: building affordable housing is anything but cheap.
While a need for seven million affordable rental housing units exists nationwide, the supply to meet that demand is less than forthcoming. Nearly all affordable housing units serving populations earning no more than 50 percent of the area median income require subsidies, typically low-income housing tax credits.
With over $7 billion such tax credits available nationwide, it would seem that the supply shouldn’t be the issue. But as one expert noted in the article, the tax credits have to be wedded to low-cost governmental financing, inexpensive bank lending, private equity, project-based housing choice vouchers or multiple other financing subsidies to keep the units affordable for low-income renters.
Without these other layers of low-cost financing, the units will require higher rents so that developers can cover their costs. However, when the rents go up, affordability is lost forever.
All in all, this is an informative article on a very dense subject. It’s anything but affordable to build affordable housing.