What does 2013 hold for the affordable housing industry? Affordable Housing Finance’s Editorial Advisory Board weighed in with some predictions for the new year. With uncertainty ahead, a tough year could be in store for the affordable housing industry, some of the members concluded. Topping the list are the battle to maintain the low-income housing tax credit (LIHTC) as well as other challenges related to tax reform.
Where do your predictions fall on this list? Or do you have other thoughts of what might be coming down the road. Be sure to leave your feedback in the Comments box at the end of the article.
1.    The battle to preserve the low-income housing tax credit will take priority. The challenge will be to escape being sucked into the “Loophole Whirlpool,” said one EAB member. However, another one predicted, “The LIHTC program will remain the same or be reduced by a small percentage but not eliminated.”
2.    Continued uncertainty in the financial markets because of tax reform, which will affect deals. Deals will be much tougher to do, and fewer will be done due to lower credit prices and the lack of soft funds to fill the gaps. Deals will either be more vanilla with fewer frills or will be highly targeted to meet the highest priorities of the states’ qualified allocation plans and available soft funds. However, one EAB member did predict that LIHTC pricing across the country will increase.
3.    A likelihood for serious revision of tax-advantaged investing of all types, especially those that are corporately oriented.
4.    The credit allocation per capita will be reduced.
5.    There will be continued Community Reinvestment Act dominance in the capital supply, with large spreads in equity pricing. But one EAB member said the industry will see the gradual return of economic investors by the end of 2013.
6.    Interest rates  will remain low throughout 2013.
7.    The nation will go over the fiscal cliff, which will have some impact on Sec. 8 subsidies and other programs, although some of the cuts will be restored.
8.    Preservation of the federal guarantee for multifamily mortgages on affordable properties as we move into the post-GSE era.
9.    Help will be given to multifamily Federal Housing Administration programs to survive and move into a delegated processing mode.
10.    The administration will continue to focus and perhaps speed up “federal harmonization efforts,” which will help owners of developments funded by various programs.