Housing Studies Report Suggests Expansion of LIHTC Program
Recently, Harvard University’s Joint Center for Housing Studies (JCHS) released “State of the Nation’s Housing 2015,” which suggests that an expansion of the Low-Income Housing Tax Credit is needed in order to respond to increasing pressures on the program.
According to JCHS, the number of renter households considered cost-burdened—those paying more than 30 percent of their income on rent—reached an all-time record high in 2013 of nearly 21 million. This translates to just under half of all renter households. In addition, cost burden is even more prevalent among low-income renters, with over 80 percent of households with incomes under $15,000 (or a full-time minimum wage job) paying more than 30 percent of their income in rent in 2013.
Increased cost burdens are the result of a shortage of affordable housing. According to JCHS, there are only 34 adequate and affordable units available for every 100 extremely low-income renter households nationwide. This affordable housing supply gap has nearly doubled from 2003 to 2013. Meanwhile, the number of very low-income renters qualifying for HUD rental assistance increased by 18 percent between 2003 and 2013, from 15.7 million to 18.5 million, with only 26 percent of those eligible actually receiving rental assistance in 2013.
While affordable housing needs are growing, the housing credit is needed to fill an even greater role, especially related to preserving existing affordable housing. According to the JCHS report, “Although funding for housing choice vouchers did increase in recent years, the cost of subsidies also rose, limiting growth in the number of federally assisted households. Meanwhile, severe cuts in the HOME program have hampered the ability of state and local governments to add new assisted units. To make matters worse, the affordability periods of more than 2 million assisted housing units are set to expire over the coming decade, and preserving this critically important resource will require a renewal of federal commitments. The Low Income Housing Tax Credit program—the key tool for both developing and preserving affordable rentals—is under increasing pressure from these competing needs.”
The report concludes by noting the increasing demands for both rental housing construction and preservation. “The LIHTC program is a critical source of investment capital that will be necessary to keep the units affordable. These competing demands—for new construction as well as preservation—have put the tax credit program under extreme pressure and raised the question of whether it ought to be expanded,” notes the report.