Congress Must Not Lose Focus on Affordable Housing

In this era of extreme partisanship and polarization, there aren’t many issues that a supermajority of Americans agree on — except housing.

A recent Pew poll found that 85 percent of Americans identify access to affordable housing as a problem facing the country — half of which label it a “major” problem. This is backed up by data, which shows that housing accounts for more than one-third of the entire Consumer Price Index (CPI), and has been the biggest driver of recent inflation numbers that have remained stubbornly high.

States as politically divergent as Florida and California have passed meaningful legislation to address this vital need. However, a bill that would alleviate America’s housing crisis has stalled in a fractional Senate after sailing through the House in early February with 357 votes in a rare showing of bipartisan support.

In addition to its housing provisions, the bill provides political wins for both parties in the form of restoring certain R&D write-offs, a Republican priority, and re-introducing the Child Tax Credit, a goal of many Democrats since its expiration in 2022.

If passed, H.R. 7024 — otherwise known as the Tax Relief for American Families and Workers Act of 2024 — will deliver more than 200,000 affordable homes through its expansion of the Low-Income Housing Tax Credit Program (LIHTC). The bill would spur this development through two key mechanisms: first, it would restore a 12.5 percent allocation increase that expired at the end of 2021, providing states with more tax credits; second, it would reduce the private activity bond (PAB) financing requirement from 50 percent to 30 percent for the 4% housing credit, allowing these scarce PABs to be spread among a greater number of projects. Taken together, the bill represents the largest increase in affordable rental housing resources since 2000.

For four decades, LIHTC has been the nation’s primary tool for supporting the development and rehabilitation of affordable housing. Since its inception in President Ronald Reagan’s 1986 tax bill, the LIHTC program has financed more than 3.7 million units of affordable housing. Today, it finances nearly 90 percent of all affordable housing starts — virtually no new affordable housing can be built without it.

This public-private partnership model allocates tax credits to states based on population, and in turn, developers compete for an award of these credits based on how well the project satisfies housing needs in their area. It also locks in affordability by requiring that these projects be maintained as affordable for at least 30 years.

Today, there is no state, metropolitan area, or county in which a full-time minimum-wage worker — say, a single mother with a child — can afford a modest two-bedroom rental. In 92 percent of counties even a one-bedroom apartment is out of reach for these workers, finds the National Low Income Housing Coalition. At the same time, the number of people who rent has never been higher. Between 2020 and 2022 alone, America gained 1.1 million renter households, bringing the total number of renters nationwide to 44.2 million, a record high in the 20 years that Harvard’s Joint Center for Housing Studies has been collecting data.

LIHTC is a lifeline for low-income families, seniors, and people with disabilities, but the benefits of the credit extend far beyond those who are eligible to receive reduced rents.

Incentivizing new affordable housing increases the overall supply in the market and reduces competition for private-market housing. By reducing housing costs for tens of millions, the housing credit helps prevent families from falling into homelessness due to eviction, the onset of a health condition, or simply having to choose between groceries and shelter. Affordable housing is proven to combat intergenerational poverty by connecting people to opportunity, better neighborhoods, and better schools, and enabling upward socioeconomic mobility. It also means more federal money flowing into our neighborhoods.

In an era of growing housing needs, limited housing availability, declining social mobility, and the crisis of homelessness, LIHTC is our one true bulwark.

If you want to fix the economy — start with housing.

Will Blodgett is the CEO and Founder of Tredway, an affordable housing development firm, and serves on the board of the Affordable Housing Tax Credit Coalition (AHTCC).