September 14, 2022

When it comes to affordable housing development – LIHTC makes an impact—and can do even more

When it comes to affordable housing development – LIHTC makes an impact—and can do even more

As the COVID-19 pandemic continues and costs rise from the grocery store to the gas pump, putting a roof over one’s head has become more difficult than ever for many Americans. Today, over 10 million low-income households—1 in 4 renters—spend more than half of their monthly income on rent.1 Rents have increased over the last ten years and the number of apartments renting for less than $600 a month decreased from 32% to 22% of the overall market.2 Others struggle to find affordable housing close to work and school.

This is not the first time America has grappled with housing challenges. In 1986, the Reagan Administration encouraged the multifamily industry to build more affordable housing with the Low Income Housing Tax Credit (LIHTC) program, offering a dollar-for-dollar reduction in federal income tax.

It worked. Since then, LIHTC has financed the development of nearly 3.5 million rental homes across the country3 and supported over eight million low-income households.4 Residents include veterans of the armed forces, senior citizens, formerly homeless families and individuals, people recovering from opioid addiction, people with disabilities, and low-wage workers.

Unfortunately, affordability and income restrictions are set to expire for more than 300,000 federally assisted rental homes by the end of 2025. LIHTC can assist even more individuals and families, especially with the expansions and enhancements of the proposed Affordable Housing Credit Improvement Act.5 This legislation would increase the annual Housing Credit allocation by 50 percent, focus on serving hard-to-reach areas and populations, remove barriers and streamline program regulations. Now more than ever, this program plays a critical role in bridging the affordability gap and increasing housing stock.

LIHTC counters development constraints

In urban, suburban, and rural areas nationwide, constraints such as labor shortages, land restrictions, and building cost increases have limited the creation of new housing units, contributing to a shortage of 3.8 million homes.6 Affordable housing presents even more obstacles, including environmental and labor requirements, local zoning policies, lengthy permitting and approval processes, and land-use restrictions.

LIHTC addresses this intimidating list of “cons” with many compelling “pros” for developers. Above and beyond the federal tax credit, benefits include a 15-year compliance period, strong protections for affordability, and the ability to claw back credits. Virtually no new affordable housing is built today without the Housing Credit.

Moreover, LIHTC properties tend to have low foreclosure rates and low vacancy rates, with an annual foreclosure rate of less than 0.1% in any year since 2000.7 In fact, LIHTC-facilitated housing projects often become thriving communities. Additionally, the local economy directly benefits from LIHTC construction as the local income earned during construction is often recycled into the local economy.

Abbott Arms is one example. Walker & Dunlop financed and provided LIHTC equity for this 100-unit affordable townhouse development in Cayce, South Carolina. Here, as in many places, it’s difficult to find an affordable place to live. Abbott Arms makes it easier by imposing income restrictions to 60% of the area’s median income and accepting Housing Choice Vouchers, which 97% of residents use. Residents also join a supportive community, thanks to the owners’ partnerships with local groups and nonprofits. Services include adult education, elder care, children’s programs, and a full-time, on-site learning coach.

Having a secure and stable place to live will increase the quality of life for these residents and allow them to have a better economic future. We have many other examples across-the-board of LIHTC properties housing formerly-homeless populations, seniors, military veterans, as well as working families.

LIHTC is part of a larger ecosystem—and the communities of the future

Walker & Dunlop has invested extensively in LIHTC. With the acquisition of Alliant Capital and the creation of a new affordable investment sales team, we’ve become a one-stop tax-credit syndicator, lender, and risk manager—helping our clients navigate the layers of planning, reviews, and government approvals—and offer in-house underwriting and diligence that adheres to government standards.

Moreover, Walker & Dunlop is part of a larger trend, joining states that have passed legislation amenable to new multifamily developments and municipalities exploring solutions like fee and permit waivers, fast-track permitting, and streamlined local reviews.8 Everyone is working together toward a shared vision: More people living in well-tended properties and thriving neighborhoods, close to school and work, without spending more than half of their income on rent.

Interested in learning more? Check out our affordable housing capabilities.

1 Joint Center for Housing Studies of Harvard University, America’s Rental Housing 2022,
2 Freddie Mac LIHTC Report, July 2022,
3 Novogradac, “DASH Act’s Middle-Income Housing Tax Credit Would Finance 344,000 Affordable Rental Homes for Households Just Above LIHTC Income Limits,” Dirk Wallace and Peter Lawrence, September 2, 2021,
4 Affordable Housing Finance, Factsheet, August 13, 2020,
5 Affordable Housing Tax Credit Coalition. 2021.
6 Up for Growth, Housing Underproduction in the U.S. 2022,” July 18, 2022,
7 Affordable Housing Tax Credit Coalition,
8 0 Up for Growth, Housing Underproduction in the U.S. 2022,” July 18, 2022,

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