US affordable housing gap: Empty units, priced-out poorest

Across the United States, a stark mismatch is emerging in the affordable housing market. While cities like Austin, Denver, and Portland report thousands of vacant, income-restricted units, the very poorest renters—those earning below 30% of the area median income—remain priced out and often homeless.

In Austin, Texas, Mathew Davis, a 49-year-old shelter resident, survives on a few hundred dollars a month from donating blood plasma. Even a $450-a-month micro-apartment with shared bathrooms is beyond his reach. Yet the city has over 4,500 vacant affordable units, a vacancy rate of nearly 16%, according to real estate data firm CoStar.

The core problem is a financial one. Federal tax credits, which incentivize developers to build affordable housing, often make it unviable to serve the poorest tenants. The rent from a unit for someone earning 60% of the area median income barely covers operating costs, leaving no room to subsidize units for those earning half as much. As a result, most new affordable housing is targeted at people earning at or above 50% of the area median income.

This creates a paradox. In booming cities, the rent for these 60% AMI units approaches market rates. Consequently, many potential renters choose to pay slightly more for a market-rate apartment, which offers faster approval and less paperwork. This leaves the affordable units vacant, while the poorest individuals are left on waitlists or in shelters.

Nationally, the gap is immense. There are only about 4 million affordable rental units for 11 million extremely low-income renter households. Experts estimate that only one in four eligible families receives a housing voucher, which could help bridge the gap. However, the waitlists for such vouchers can stretch for years.

Some experts argue the tax credit program is overly complex and inefficient, suggesting direct rental subsidies would be more effective. Others counter that the two programs are complementary, as tax-credit properties are required to accept vouchers.

In Austin, the city's goal of building 20,000 units for extremely low-income residents by 2027 is far off track, with only 543 built as of 2024. Meanwhile, all 15,000 planned units for those earning 60% to 80% of the area median income were completed. For people like Davis, the frustration is palpable. "I want to shut the door at night and be able to sleep," he said, expressing a simple desire for a stable home.