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US housing incentive faces crisis
The federal tax credit program supporting low-income housing production in the US is facing criticism, exemplified by subsidized apartments remaining vacant in Portland and market prices...
The federal tax credit program used to support low-income housing production in the US is increasingly under harsh criticism. It is reported that the program enables the construction of new apartments with up to $15 billion in tax incentives annually; however, a significant portion of these apartments remain above the affordability level for the lowest income groups.
The situation is particularly striking in Portland, Oregon. While thousands of people try to shelter on the streets, in tents, bushes, and overpasses every night, local government and developers have increased new housing production supported by the federal program. Nevertheless, rents, home sale prices, and the housing crisis have continued to grow simultaneously.
Highlights
- The federal program provides up to $15 billion in tax credits annually nationwide.
- The majority of the program is used as a key tool to encourage new housing production.
- In Portland, the rent level of subsidized housing often remains close to market rents.
- Recent counts indicate approximately 2,000 subsidized units remain vacant in the city.
- Criticism focuses on the program not providing sufficiently deep support to the lowest income group.
The gap between rent and income
According to the program's basic conditions, developers are generally required to keep rents at a level affordable to a household earning 60% of the median income. This threshold corresponds to an annual income of about $75,000 for a family of four. However, in some cities, this figure already approaches ordinary market rent.
As a result, the monthly rent for one-bedroom apartments in many units produced with federal incentives reaches about $1,400. While this amount seems manageable for a family earning $75,000 annually, it corresponds to nearly half of the monthly income for someone earning around $35,000 at the local minimum wage.
Vacant subsidized apartments
It has been reported that about 2,000 subsidized units have recently remained vacant in Portland. This situation is not unique to a single city; similar examples are seen from Seattle to the San Francisco Bay Area and Denver.
Experts have long criticized that the program does not provide sufficiently deep support to very low-income renters. Research suggests that this model often produces housing in income and rent ranges already abundant in the market; it does not significantly increase total supply beyond what the market itself would produce.
Why criticism is growing
Academics and urban planning experts criticizing the program say that directing public funds to rent assistance vouchers that directly support tenants could be more effective. Some calculations suggest that the same money could have up to twice the impact if delivered directly to tenants.
The program's complex structure has created a new sector in low-income housing, benefiting a wide range of people from developers to investors, lawyers to accountants. Critics argue that the system has turned into an incentive industry rather than housing production.
Political support in Washington
Nevertheless, the program continues to receive strong support from both parties. The tax credit, long seen as a key tool in federal housing policy, is defended by various groups. Those opposing the complete elimination of housing programs argue that it is one of the most successful federal housing production tools in the US.
Meanwhile, some senators advocate expanding the program. This approach, contrary to critics' suggestions, involves extending support not only to low-income families but also to middle-income groups. Critics emphasize that the real need is for deeper subsidies that truly reach the lowest income group.
What the Portland example shows
Although housing production in Portland has accelerated in recent years, this increase has not been sufficient to ease rent pressure and homelessness. While affordable housing production has noticeably risen in the last five years, rents and home prices have continued to increase faster than incomes.
Experts say the main problem is not just construction speed; supported rents do not fall within the payment capacity of the lowest income group. Therefore, despite new buildings being constructed, vacancy rates are rising, and some subsidized projects fail to reach expected occupancy.
Context: Low-income housing credit has been one of the main tools of housing production in the US since the 1980s. However, the situation in Portland shows that simply producing more buildings does not solve the housing crisis; who the housing is for, at what rent level, and how quickly it is produced are decisive factors.
In cities where the housing crisis deepens, the debate has shifted from how many units are built to whether these units are truly affordable for those in need. Critics say the program, in its current form, has become a structure that competes with the market but does not adequately protect the most vulnerable households.
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