Financing affordable housing in the United States

This article addresses the problem of the gap in affordable housing in the United States and the efforts being made to address the gap. At issue are the forms of federal financial support for affordable housing and the relative roles of private, for-profit suppliers; local public housing agencies; and nonprofit, community-based developers in providing affordable housing. The primary U.S. vehicle for affordable housing production is currently the low-income housing tax credit. While this system has produced nearly 350,000 units of low-income housing, it has inherent inefficiencies relative to a direct capital grant and currently requires assembling mortgage financing from a number of sources. Congress and the Clinton administration have been reluctant to encourage much additional development by public housing agencies, and the capacity of nonprofit, community-based developers is still limited. Experiments are under way on a variety of credit enhancement and risk-sharing techniques.