The poorest individuals in the United States are facing a severe shortage of affordable housing, even as a growing number of designated low-income units remain unoccupied. Many of these vacant units are priced too high for those with extremely low incomes, creating a paradox where available housing goes unused while a significant portion of the population struggles with homelessness or housing insecurity.
Nationwide, there are approximately 4 million affordable rental units available for the 11 million renter households with extremely low incomes. These households typically earn below the federal poverty guidelines or 30% of their area's median income, a group that includes many low-wage workers, seniors, and individuals with disabilities. According to a report from the National Low Income Housing Coalition, about three-quarters of these households spend over half of their income on rent and utilities, leaving minimal funds for other essential needs.
The majority of low-income housing financed in recent years, particularly through the federal Low-Income Housing Tax Credit program, targets individuals earning 50% of an area's median income or higher. In 2024, units for those earning at least 50% of the area median income constituted the bulk of housing financed by this program, while units specifically for extremely low-income renters made up only about 12%.
This disparity has led to increasing vacancy rates in some cities. In Austin, Texas, over 4,500 affordable units, nearly 16% of the total, are vacant. This situation is mirrored in cities like Denver, where vacancy rates for units designated for 60% of area median income are 13%, and for 80% of area median income units, they reach 21%. Portland, Oregon, reports over 1,700 vacant affordable units, contributing to a 7.5% vacancy rate.
Developers of affordable housing note that without substantial subsidies, it is often not economically feasible to create units for extremely low-income residents. The operational expenses for these units, coupled with rents that would be affordable to those at the 30% area median income level, often result in a financial shortfall. This economic reality forces many developers to prioritize units for those earning 50% or 60% of the area median income.
In some markets, rents for units designated for 60% of area median income are approaching market-rate prices. This trend, combined with the more stringent income verification and longer application processes for affordable housing, incentivizes some renters to opt for market-rate apartments that offer quicker approval and more flexibility. This leaves a growing number of affordable units vacant.
Experts like Chris Edwards, an economist at the Cato Institute, have criticized the Low-Income Housing Tax Credit program for its complexity and high administrative costs, suggesting that direct housing vouchers for tenants would be a more efficient approach. However, other experts argue that tax credit-financed properties are crucial because they are required to accept vouchers, a requirement not always met by market-rate apartments.
Despite the challenges, efforts are being made to address the gap. In Austin, city officials have acknowledged the need to increase housing production for the poorest residents and are now prioritizing funding proposals that include units for those at the 30% area median income level. Matched with individuals like Mathew Davis, who remains in a homeless shelter while seeking an affordable place to live, the demand for genuinely affordable housing persists.