National Real Estate Investor's Bendix Anderson looks at how construction costs are impacting the production of new affordable housing, such as developments financed by the low-income housing tax credit (LIHTC).

The amount of new units of affordable housing has been on the decline, according to the National Council of State Housing Agencies, even as demand for such housing is at an apex. More than one in three Americans are struggling with the high cost of housing, the highest level recorded, according to the latest State of the Nation's Housing report produced by the Joint Center for Housing Studies of Harvard University.

“The number of units of affordable housing produced has been trending slightly downwards,” says Jennifer Schwartz, assistant director for tax policy and advocacy for the National Council of State Housing Agencies.

... Developers are producing fewer affordable apartments as the cost to produce each unit has been going up. High costs of construction and rising labor costs have made development more expensive. In addition, more affordable housing communities are being built for people with lower incomes, which can increase the cost to develop a property. “If you are going to use more LIHTCs per unit to develop properties, you’re going to have fewer units,” says Schwartz.

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