Homes financed with low-income housing tax credits (LIHTCs) provide rents that average 38% less than market-rate rents, according to an analysis by the Affordable Housing Tax Credit Coalition (AHTCC).
Using data provided by Moody’s, the AHTCC found that LIHTC monthly rents average $653 lower than those of market-rate properties across 80 U.S. metros, potentially saving residents $7,800 annually. By saving on housing costs, low-income residents are able to direct more resources toward essentials such as health care, child care, groceries, and transportation.
“This first-of-its-kind analysis provides insight into the substantial real-world savings for people living in homes made possible by the housing credit,” said AHTCC CEO Emily Cadik. “The numbers underscore that the housing credit does not just expand the country’s affordable housing supply but also directly supports household well-being and economic security, which in turn stimulates the economy.”
The study compared 1.2 million LIHTC homes with 12.7 million market-rate homes for fiscal 2023.
In San Francisco, residents in housing tax credit-financed properties are saving as much as $1,686 per month compared with market-rate housing. In Tampa, Florida, LIHTC residents are saving about $678 each month.
The analysis examined some of the nation’s most housing-constrained cities, including the following:
The study comes as affordable housing advocates call for expanding the LIHTC program to help ease the housing crisis. The Affordable Housing Credit Improvement Act (S. 1557 and H.R. 3238) seeks to restore a 12.5% cap increase and further boost allocations, lower the bond financing threshold from 50% to 25% to receive the full amount of 4% housing credits, and make other improvements.
More than half of the 118th Congress has signed on in support the AHCIA.
“The rent savings highlighted by the Moody’s data demonstrates the important role LIHTC plays in the housing landscape,” said Nick Luettke, associate economist at Moody’s. “Households renting LIHTC-funded units are better able to afford rent and engage in their local economies with their rent savings. While the level of savings varies based on the local housing environment and economy, rent saving outcomes are observable across the country.”
Ryan Sfreddo, president of the AHTCC board of directors and CEO of Red Stone Equity Partners, added the need for affordable housing in the nation has never been more acute and the call to action has never been more urgent.
“Our findings show what we have known for some time—that the savings made available to low-income renters through the housing credit are significant and demonstrate the need to expand this vital and successful public-private partnership program,” Sfreddo said.
