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Busting Affordable-Housing Myths
There is little doubt that there is a shortage of affordable housing. Jeff Brenner with IMPACT Community Capital pointing out a sobering statistic from the National Low Income Housing Coalition. Namely, for every 100 extremely low-income renter households, only 35 affordable and available rental homes exist. Translating this into larger numbers, the nation faces a shortage of seven million affordable and available homes to low-income renter households.
Even with the lack, institutional investors have shied away from the sector. In response. Brenner listed several affordable housing myths that needed busting. One such myth, that the sector underperforms, is false. “IMPACT has found that LIHTC-financed developments have had lower default rates than traditional multifamily projects, due to the tax credit equity structure,” he wrote.
Another myth, that affordable housing can’t happen at scale, is also false. Brenner noted that, for individual deals, lack of scale could be an issue. However, “The use of a familiar Wall Street financial vehicle, mortgage-backed securitization, is an approach IMPACT has used in affordable housing to create investment scale and attract large amounts of capital from institutions,” Brenner explained.
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