The U.S. Lost Half A Million Affordable Housing Units Since Pandemic Onset

The U.S. shortage of affordable housing, bad enough before the pandemic, has only gotten worse since 2020, according to a new report by Moody's Analytics. Since then, a combination of factors have conspired to eliminate 500,000 units for extremely low-income renters nationwide, or about 8% of the total stock.

Many affordable housing properties for that income group, which were funded via Low-Income Housing Tax Credits, or LIHTCs, have reached the end of their 30-year compliance period in the last few years. At the end of that period, the property owners have the option of converting their units to market rate.

As market-rate rents skyrocketed in many markets during 2021 and 2022 especially, the incentives for owners to convert has been strong.

“Combined with the pandemic and rents increasing, that puts buildings in the position where they might want to take advantage of that,” Moody's data scientist David Caputo, a co-author of the report, told Commercial Observer.

As LIHTCs reach the end of their compliance periods, more affordable units stand to be lost. By 2028, some 188,000 LIHTC units will expire, Moody's reports.

The loss of affordable units is particularly dire for extremely low-income households, or those with incomes at or below the federal poverty guideline, or at or below 30% of area median income.

They constitute about half of the residents of units supported by LIHTCs, and without rental assistance and affordable options, “there is a high potential for evictions, homelessness, and general housing instability within this group,” according to the report.

Even with rental assistance, the ongoing shortage of affordable rental units makes it difficult for extremely low-income households to find shelter if they are displaced.