Expirations and Early Exits of LIHTC Units: Implications for the Affordable Housing Stock

Dustin Ingram and Maxwell Jaffe
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Maxwell Jaffe: https://www.chicagofed.org/people/j/jaffe-maxwell

Chicago Fed Letter, 2025, vol. 514, 10

Abstract: The Low-Income Housing Tax Credit (LIHTC) is the nation’s largest source of financing for the development and preservation of affordable rental housing. The program provides tax credits to developers that may cover a portion of their acquisition, construction, and rehabilitation costs. In exchange for these credits, developers must ensure affordability for tenants whose earnings are at or below specific percentages of the area median income (AMI) with rental rates that do not exceed 30% of their gross income. LIHTC affordability requirements last for 30 years at a minimum. The earliest LIHTC projects are reaching the end of their mandated affordability periods. In addition, many LIHTC property owners are pursuing early exits from LIHTC affordability requirements amid rising market rents. In this article, we examine these trends while evaluating their potential effects on the supply of LIHTC-supported housing.

Keywords: Inflation; Housing; Affordable housing; low-income housing; Government expenditures; housing supply and markets; regional economic development; Infrastructure (search for similar items in EconPapers)
JEL-codes: H53 O18 R31 R38 R58 (search for similar items in EconPapers)
Date: 2025
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