Study Finds Nearly Three-Quarters of Municipalities Lack LIHTC Housing

A new article published in Housing Policy Debate, The Geography of Absence: Cities, Towns, and Suburbs with No LIHTC Housing,” examines the differences in municipalities with and without Low-Income Housing Tax Credit (LIHTC) housing. According to the study, LIHTC housing is present in all central cities of large metropolitan areas, but almost three-quarters of other local jurisdictions lack any LIHTC housing. Municipalities that experienced population and multifamily housing stock growth between 2010 and 2019 are more likely to have LIHTC housing, but a majority (52%) still do not offer it. The authors find that municipalities that exclude LIHTC housing tend to be smaller, wealthier, and whiter compared to areas that include LIHTC housing. 

The authors used HUD’s LIHTC database to calculate the number of LIHTC properties and units within each U.S. municipality. They also utilized data from the American Community Survey (ACS) to evaluate the differences in demographic, socioeconomic, and housing-stock characteristics of municipalities with and without LIHTC properties between 2014 and 2019. Their analysis distinguishes between all municipalities and growing municipalities, which they define as municipalities that saw increases in population and multifamily housing units.

The authors find that 72% of all municipalities have no LIHTC housing. Growing municipalities in metropolitan areas are more likely to accommodate LIHTC housing, but 52% of such municipalities still lack any LIHTC housing. Higher rates of growing municipalities in micropolitan (56%) and nonmetropolitan (65%) areas exclude it. The authors find that the lack of LIHTC housing is widespread and pervasive throughout the country, even in states like New Jersey and California that require municipalities to provide affordable housing.

The authors find that municipalities that are smaller, wealthier, whiter, and have less rental housing are more likely to have no LIHTC housing. While only .9% of municipalities with populations of 100,000 or more exclude LIHTC housing, 19% of municipalities with a population between 25,000 and 49,999 exclude it and 83% of municipalities with populations of less than 5,000 exclude it. Municipalities that included LIHTC housing also had a higher number of renters, with 40% of the housing stock as rental housing compared to 27% of their exclusionary counterparts on average. The municipalities with LIHTC housing also had higher population shares of people of color than jurisdictions without LIHTC housing (31% vs. 22%) and higher poverty rates (17% vs. 14%). The biggest discrepancies emerged when looking at the presence of public housing and other federally subsidized housing: while municipalities that included other federally subsidized housing programs had LIHTC housing 64% of the time, only 14% of those without federally subsidized housing included LIHTC housing. 

The authors also analyzed factors predicting the absence of LIHTC housing. The most significant factor predicting the absence of LIHTC housing is whether a municipality is in a suburb in large metropolitan area, which increases the likelihood of exclusion by 19%. This factor, however, is not statistically significant for growing municipalities. Increases in total population are associated with a 9.6% decrease in the odds of LIHTC exclusion among all municipalities, and a 6.2% decrease in the odds among growing municipalities. While the total share of residents of color is not a significant predictor of LIHTC exclusion, increases in the share of residents of color are associated with a 1.1% increase in the odds of LIHTC exclusion among all municipalities and a 2% increase among growing municipalities.

These findings suggest that despite being the largest affordable housing program in the country, LIHTC has yet to enter many housing markets. The authors propose a few solutions to address this problem, including state-level mandates for municipalities to meet state-wide affordable housing needs and implementing regional housing choice voucher programs that facilitate access to municipalities lacking affordable housing options.

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