A joint report by the Public and Affordable Housing and Research Corporation and the National Low Income Housing Coalition, 2021 Picture of Preservation, provides a state of the nation for federally assisted affordable housing preservation.

Federally assisted rental homes play a crucial role in the social safety net by making housing affordable to the lowest income families and comprise 10% of the nation’s rental housing stock.  Federally assisted homes represent 13 – 15% of the Northeast’s rental stock compared to 7 -8% of the West’s rental stock.

Preservation risks, stemming from expiring affordability restrictions, underfunding, or disrepair put federally assisted rental homes at risk of being lost from the affordable housing stock

Preservation risks, or the factors that increase the likelihood that federally assisted rental homes are lost from the affordable rental stock, fall into three general buckets, the report says:

Exit Risk: Expiration or termination of affordability restrictions.

Affordability restrictions are set to expire for 312,446 (6%) federally assisted rental homes by the end of 2025. Low Income Housing Tax Credit and project-based Section 8 currently account for most of these homes (44% and 42%, respectively). The report cites numerous studies showing “properties in strong housing markets owned by profit-minded owners are at greater risk for converting to market-rate housing.” Nonrenewable subsidies, like expiring LIHTCs, assist 59% of federally assisted homes with affordability restrictions expiring in the next five years compared to 47% last year.

According to the report, 60% of federally assisted homes with expiring affordability restrictions demonstrate two or more preservation risk factors. “Risk factors include a lack of capital subsidies received in the past 20 years, for-profit ownership, a pre-1975 construction date, and failing Real Estate Assessment Center scores for project-based Section 8 homes,” the report says.

Depreciation Risk: declining financial or physical condition of properties.

Because federally-assisted homes rely on thin margins that require a mix of sufficient, ongoing operating subsidy and capital investments, “these properties can fall into disrepair if costs or rental income deviate from projections or if appropriated funding is inadequate,” the report says. Poor property conditions and foreclosure resulted in the loss of more than 250,000 public housing and project-based Section 8 homes since 1996, the report says.

Compounding the loss of affordable housing through depreciation risk is the fact that comprehensive housing quality data isn’t available for the Low Income Housing Tax Credit and USDA Section 515 programs. Meanwhile, 72% of Section 515 assisted homes and 23% of LIHTC assisted homes are older than 20 years and likely require capital investment to keep up with routine maintenance.

Appropriations Risk: Insufficient congressional funding.

As federally-subsidized owners and stakeholders know, and the report points out, “Affordable housing requires continual investment in operating assistance and subsequent capital subsidies to prevent its loss through exit or depreciation.”

The report also looks at the federally-subsidized housing lost in 2020 and estimates that 44,629 federally assisted homes were lost that year. Of these, the report says, 38% were lost when affordability restrictions were terminated early (most within the Low Income Housing Tax Credit program), 33% because their affordability restrictions expired in 2020, 23% from units in the public housing inventory likely lost through disposition, and 7% where units had no change in subsidies but the number of assisted units were reduced.

“Preservation is essential for any realistic approach to protecting the lowest-income renters and expanding the supply of affordable housing for them. Preservation mitigates displacement and housing instability for current tenants, prevents the loss of difficult-to-replace affordable housing, reverses disinvestment from distressed communities, presents an opportunity to reduce greenhouse gas emissions through energy retrofitting, and prevents the further decline of the already limited federally subsidized housing stock,” the report says.

The National Housing Preservation Database (NHPD), used to develop much of the data in the report, was created by the Public and Affordable Housing Research Corporation (PAHRC) and the National Low Income Housing Coalition (NLIHC) in 2011 in an effort to provide communities with the information they need to effectively preserve their stock of public and affordable housing. The database provides over 5,000 users access, including LeadingAge staff, to de-duplicated information on federally assisted housing inventory across the U.S. at no cost.

Read the full report as well as other resources associated with the report here.