Poorest Americans struggle for housing amid vacant low-income units

Mathew Davis, who lives in a homeless shelter in Austin, Texas, earns a few hundred dollars a month donating blood plasma. Even a basic $450-a-month tiny home would be a financial stretch, he said. Meanwhile, in Austin, over 4,500 units classified as affordable have a vacancy rate of nearly 16%, according to real estate data firm CoStar. A healthy vacancy rate is typically around 5%.

Nationwide, there are approximately 4 million affordable rental units available for the 11 million extremely low-income renter households in the U.S. These households typically earn below the federal poverty guidelines or 30% of their area's median income. About three-quarters of these households pay over half their income on rent and utilities, leaving little for other necessities.

Homes set aside for extremely low-income renters constituted only about 12% of affordable housing units financed in 2024 by the Low-Income Housing Tax Credit program. The majority of units financed by this program are for individuals earning at least 50% of an area's median income. In Austin, this means a single person earning around $47,000 annually, compared to an extremely low-income person earning under $28,000.

Chris Edwards, an economist at the Cato Institute, described the Low-Income Housing Tax Credit program as complex and bureaucratic, which increases construction costs. He suggested that direct subsidies to tenants, such as housing vouchers, would be a more efficient approach. However, other experts note that properties built with tax credits are required to accept vouchers, a benefit not always extended by market-rate landlords.

Some affordable housing developers state that without significant subsidies, it is not economically feasible to create units for extremely low-income individuals. Carmen Romero, president and CEO of True Ground Housing Partners, explained that operating expenses for a unit targeting 60% of area median income leave only $140 profit after mortgage and expenses, and an extremely low-income unit would yield even less.

The rents for affordable housing units, particularly those for individuals earning 60% of area median income, are approaching market-rate levels in cities like Austin, Denver, and Portland. This trend leads some individuals to opt for market-rate apartments that offer less stringent income verification and faster approval processes, contributing to the growing number of vacant affordable units.

Disagreement on program effectiveness

Chris Edwards, an economist at the Cato Institute, stated that the Low-Income Housing Tax Credit program is complex and bureaucratic, increasing construction costs. Other experts, however, suggest that the program works in conjunction with housing vouchers, as tax credit-financed properties are required to accept them, while market-rate landlords often do not.

What the coverage left out

None of the left-rated digests mention the specific vacancy rate for 60% AMI units cited by LDG Development in Austin (12%). None of the centre-rated digests mention the specific vacancy rate for 60% AMI units cited by LDG Development in Austin (12%). None of the right-rated reports mention the specific vacancy rate for 60% AMI units cited by LDG Development in Austin (12%).