Today the National Council of State Housing Agencies (NCSHA) published a new report, Variation in Development Costs for LIHTC Projects, which analyzes total development costs in Low-Income Housing Tax Credit (Housing Credit) developments nationwide. The report finds that Housing Credit developments costs, on average, are roughly the same as development costs for all multifamily apartments.
The report, which NCSHA commissioned Abt Associates to complete, studied 2,500 Housing Credit properties containing more than 160,000 units over a multi-year period. Key findings include:
- Housing Credit-financed apartments on average cost roughly the same to develop as the typical apartment, even as Housing Credit properties must by law meet many requirements that typical apartment buildings do not.
- Housing Credit development costs have grown no faster than, and likely more slowly than, development costs for apartments overall over the last several years.
- The median total development costs per unit between 2011 and 2016, including soft costs – such as fees for contractors, architects, and other professionals – and land costs, was $164,757, adjusted for construction cost inflation. The mean was $182,498.
- The primary factors that drive the development costs of all apartment projects, including Housing Credit properties – costs of land, labor, and materials – are driven by market forces, not state agency administration.
See NCSHA’s summary of the report for more information.
The Housing Credit is our nation’s most successful tool for building and preserving affordable rental housing and the Abt Associates report is a powerful testament to the Housing Credit’s success. It has financed more than 3 million affordable rental homes over the past 30 years, providing more than 7 million low-income families, seniors, veterans, and people with disabilities homes they can afford. Virtually no affordable rental housing development would occur without the Housing Credit.
Despite the Housing Credit’s tremendous success, much more affordable housing is still needed to meet the vast and growing demand nationwide. According to Harvard University’s Joint Center for Housing Studies, nearly 20 million renter households pay more than 30 percent or more of their incomes for rent, and 11 million pay more than half their income.
The ACTION Campaign urges Congress to enact the bipartisan Affordable Housing Credit Improvement Act (H.R. 1661/S. 548) as a critical solution to address the nationwide shortage of affordable housing. Visit our Advocacy Toolkit for more information about the Affordable Housing Credit Improvement Act and resources to advocate for this critical legislation.