Poorest Americans Face Housing Crisis Despite Empty Low-Income Units

A new investigation by AP News has exposed a paradoxical crisis at the heart of America’s housing system: the nation’s poorest residents cannot find homes even as thousands of units designated as affordable sit vacant in cities across the country. The disconnect stems from a fundamental mismatch between where federal housing subsidies are directed and who needs them most.

Mathew Davis, 49, who lives in a homeless shelter in Austin, Texas, would love an apartment of his own. But with the few hundred dollars he earns each month donating blood plasma, even a $450-a-month tiny home with no running water and a communal bathroom would be a stretch. “I don’t make enough money really to afford anything,” Davis said. “I just keep trying to swim uphill.”

Meanwhile, more than 4,500 units the city classifies as affordable—nearly 16 percent—sit empty.

A National Shortage at the Deepest End

The scale of the problem is staggering. There are only about 4 million affordable rental units available for the country’s 11 million extremely low-income renter households, according to the National Low Income Housing Coalition’s most recent annual report. Extremely low-income households—those earning below the federal poverty guidelines (just under $16,000 for a single person) or 30 percent of their area’s median income, whichever is higher—comprise about a quarter of U.S. renter households. About three-quarters of them pay over half their income on rent and utilities.

Yet only about 12 percent of affordable housing units financed in 2024 by the Low-Income Housing Tax Credit (LIHTC)—the federal government’s primary affordable housing production program—were for extremely low-income renters. The majority are for those earning at least 50 percent of an area’s median income (AMI).

The LIHTC program, created under the Tax Reform Act of 1986, has financed nearly 4 million affordable units nationwide over four decades at a cost of approximately $13.5 billion annually in forgone federal revenue. But critics argue its structure inherently favors serving higher-income renters.

“It’s enormously complex and bureaucratic, and it raises the cost of construction enormously because the rules are so complicated,” said Chris Edwards, an economist at the Cato Institute, who has testified to Congress that the program’s complexity spawned an industry of law and accounting firms just to administer it. “If you’re going to subsidize affordable housing, you should give the money directly to tenants,” he said, referring to housing vouchers.

The Economics of Deep Affordability

Carmen Romero, president and CEO of True Ground Housing Partners, an affordable housing developer in the Washington, D.C., area, explained the financial reality facing developers. A unit for those earning 60 percent of the area’s median income—nearly $70,000 a year—brings in $1,715 per month in rent. But after $1,575 in mortgage and operating expenses, only $140 is left. An extremely low-income person would pay only half that rent.

“The math does not lie,” Romero said. “Our expenses don’t make it really possible to create a 30% AMI unit, unless there was this extraordinary amount of subsidy that just doesn’t exist.”

Housing vouchers could bridge the gap, but they are severely underfunded. Experts estimate only one in four eligible families ever receives a voucher, and waitlists can stretch for years.

Affordable Housing Competes With Market Rates

In cities like Austin, Denver, and Portland, Oregon, rents for units targeted at households earning 60 percent of AMI are now approaching market-rate apartment prices—creating a bizarre dynamic where affordable units sit empty while the poorest remain unhoused.

In Austin, the vacancy rate across all affordable housing has reached nearly 16 percent, according to real estate data firm CoStar. A healthy vacancy rate is around 5 percent. LDG Development, an affordable housing developer, cited a 12 percent vacancy rate for its 60 percent AMI units in Austin, noting it is in direct competition with thousands of new market-rate apartments recently built in the city.

“I have to have every bank statement, every pay check, every bill, every Venmo transaction that you had with your friends,” said Rebekah Fischer, LDG’s chief portfolio officer, describing the onerous application requirements for affordable housing. “When we’re almost going after the same renter, you can be approved within two minutes at a market-rate deal, where unfortunately in affordable housing it takes time.”

In Denver, there’s a 13 percent vacancy rate among 60 percent AMI units financed by the federal tax credit program—and a 21 percent vacancy rate for 80 percent AMI units, according to the Colorado Housing and Finance Authority. Meanwhile, housing remains drastically scarce for the city’s poorest residents.

Portland reports over 1,700 vacant affordable units for an overall vacancy rate of 7.5 percent, according to the Portland Housing Bureau. Most are for those earning 60 percent AMI—about $54,000 for a single-person household—with rent capped at $1,444 per month. That’s close to the $1,581 average rent for a market-rate one-bedroom apartment.

Portland resident Jaiden Barbee, who earns around 55 percent of the area median income and is on waitlists for affordable housing, says he’d rather pay more for a market-rate apartment to avoid the lengthy application process. “I’d rather spend the $200 extra just to get into a place easier that’s wherever I want” and doesn’t have “all these hoops,” he said.

Austin’s Missed Goals for Its Poorest Residents

The consequences of this systemic mismatch are starkest in Austin, where officials set a goal of building 20,000 units between 2018 and 2027 for extremely low-income people—17 percent of the city’s households. Just 543 were built as of 2024, according to Austin Free Press. Meanwhile, all 15,000 units planned for those earning between 60 and 80 percent of area median income were built.

“You look at the 30% below, and you’ve got 17% of the population at that income level and only 1% of the housing stock,” Austin City Council Member Ryan Alter told Austin Free Press.

Advocates argue the city has relied too heavily on market-driven strategies. “The market is always going to prioritize people with more money,” said Cate Graziani, executive director of VOCAL-TX, which advocates for people at risk of homelessness. “So if the city is relying heavily on the market to solve the affordability crisis, then naturally we’re going to see more units for people at 60 or 80% MFI than we are for people who are extremely low-income or exiting homelessness.”

Austin’s housing department has acknowledged the need to do more, including giving preference to funding proposals that include units for those earning 30 percent of AMI. But the gap remains enormous.

A Federal Policy in Flux

The housing crisis unfolds against a backdrop of significant federal policy changes. The 21st Century ROAD to Housing Act, which passed the Senate 85-5 and the House 358-32, became law in July 2026 after President Trump declined to sign it. The legislation seeks to cut federal housing rules, slim environmental reviews, speed up home construction, and limit corporate purchases of single-family homes.

Trump also signed executive orders in March 2026 aimed at reducing federal housing regulatory burdens and streamlining the mortgage process. White House economists have estimated a national shortage of 10 million homes, according to AP reporting.

Yet critics note that the new federal legislation focuses primarily on increasing overall supply and does not specifically address the needs of extremely low-income households. As Housing Forward Colorado has documented, even in markets like Denver where new construction has driven down rents across the board, income-restricted units for lower-income families face unprecedented vacancy challenges.

What’s Next

For Davis, who lived in his car for a year before getting a bed at an Austin shelter, the housing shortage for people like him is deeply frustrating. “I want to shut the door at night and be able to sleep,” he said. “I really just want to find the right place.”

As cities like Austin, Denver, and Portland grapple with the paradox of vacant affordable units alongside persistent homelessness, policymakers face a fundamental question: how to redirect housing subsidies toward those who need them most. The answer will require not just more housing, but housing targeted at the right income levels—and the subsidies to make it financially viable for developers to build it.