NHC: difficulty of financing affordable housing without subsidies

One of the most frequent questions we get asked is why there isn’t enough affordable housing to accommodate the need for hard-working low-income Louisvillians. One of the important reasons is that it is extremely difficult for developers to cover their costs when they are building affordable housing without additional subsidies.

The National Housing Conference has just released a new tool that illustrates how charging rents affordable to low-income families makes it difficult to finance affordable housing without subsidy. You can view this interactive tool here.

Regarding solutions, NHC has this to say:

Subsidies are essential to closing the gap.

Changes to land use, to regulations, or in what and how we build all will help close the gap, but we won’t get where we need to be without subsidies.

Subsidies come in different forms. Some, like vouchers or rental assistance, help pay the rent, leaving tenants enough income to pay for other needs and making the property operate sustainably. Others, like tax credits, HOME funds, Community Development Block Grants, and housing trust funds help pay the costs of construction, development, or major repairs. No one subsidy can solve the affordable housing problem. Rather, a combination of programs including federal tax credits, state housing trust funds, local zoning decisions, and public land contributions can help affordable housing get built. To close the gap for affordable housing, especially for the lowest-income households, there almost always has to be assistance for both development and rental income over time.