Affordable housing financed by tax credits doesn’t really become unaffordable when the tax credits expire. That’s because the housing never was affordable in the first place. Tax credits help the private sector build market rate homes, not affordable homes.
The financial benefit of the tax credit entices a developer to hold market rate housing OUT of the market for a period of time. It permits rental at a more affordable price. In a sense, tax credits do not buy affordable homes, they are ‘lent’ for a period of time, after which the homes return to the market place.
It should come as no surprise to anyone that when tax credits expire, the affordable-housing-that-never-was vanishes. Nevertheless it seems create a certain amount of head scratching that affordable housing seem to be ‘lost.’
Never lost, just lent, and at considerable government expense — a free market bubble under the wallpaper displaced from an earlier time, which started 32 years ago in 1986. There are 500,000 units across the US due to expire by 2030. As they return to the market place, the affordable housing void that was never permanently filled will be confronted once again by a new set of taxpayers.
Over the lifetime of the tax credits, the government is robbed of much needed revenue. The tax credits support the unaffordable prices of the free market. End result? The same amount of affordable housing is needed that was needed 32 years ago, on top of today’s enormous and growing need. It’s a heck of a way of doing business!
Read more about some of the consequences to Georgia in SaportaReport: Report: Expiring tax credits may mean loss of affordable homes
