The national vacancy rate for affordable housing is just 2.7% as of the fourth quarter in 2024 despite an inventory expansion of 17.1% over the last five years, according to Moody’s.
During that same period, Class A multifamily housing inventory has grown by 21.6%, but the national vacancy rate for Class A properties is at 7.6%, up from 6% in the fourth quarter in 2019.
“While all types of housing help alleviate housing affordability eventually by expanding options consumers have, our data suggests demand outweighs supply especially for cheaper options as highlighted by drastically different levels of vacancy between Class A and affordable housing,” says the report by Nick Luettke, associate economist, and David Caputo, data scientist.
The analysis also reveals that the Southwest has emerged as a leader in low-income housing tax credit (LIHTC) inventory growth in recent years, likely facilitated by the abundance of government-owned land in the area, which simplifies the development process, according to the report.
Notably, Westchester, New York; Los Angeles; San Francisco; and Charlotte, North Carolina, stand out as key locations where LIHTC provides renters with at least 20% savings, reflecting dedicated efforts to increase LIHTC units in these regions.
Moody’s also reports that an analysis of 12 metropolitan areas in California shows San Bernardino and Santa Barbara are facing rising rents with insufficient new construction to alleviate the pressure. In contrast, Los Angeles and San Francisco significantly surpass the national average in LIHTC new construction as they strive to bridge the growing gap between multifamily and LIHTC rents.
