Poorest Americans Locked Out as Affordable Units Sit Empty

Mathew Davis, 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 from donating blood plasma, even a modest unit with no running water and a communal bathroom would be a stretch. “I don’t make enough money really to afford anything,” Davis, 49, told the Associated Press. “I just keep trying to swim uphill.”

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

This paradox sits at the heart of America’s affordable housing crisis: The poorest Americans face the most acute shortages of affordable homes, yet the majority of low-income housing financed in recent years is built for those earning at least 50% of an area’s median income or above. As market-rate rents have fallen in some oversupplied cities, the gap between “affordable” and market rents has narrowed — leaving subsidized units vacant while the most vulnerable remain priced out.

A National Shortage of Deeply Affordable Housing

Nationally, 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 renters — those earning below the federal poverty guidelines, just under $16,000 for a single-person household, or 30% of area median income — comprise about a quarter of U.S. renter households, including low-wage workers, seniors, and people with disabilities on fixed incomes.

About three-quarters of these households pay over half their income on rent and utilities, the report found. For every 100 extremely low-income renter households, only 35 affordable and available rental homes exist nationally. No state or major metropolitan area has a sufficient supply.

Yet homes set aside for these renters accounted for only about 12% of the affordable housing units financed in 2024 by the Low-Income Housing Tax Credit (LIHTC) — the federal program that provides tax credits to developers in exchange for keeping rents low for at least 30 years. The majority of units are targeted at those earning 50% of area median income or higher.

The LIHTC Mismatch

The LIHTC, created in 1986 as a temporary three-year stopgap, has since become the primary federal mechanism for financing affordable rental housing. It now provides up to $15 billion in tax credits annually and supports nine out of every 10 subsidized units built in America.

But critics say the program has drifted from its original purpose. Developers found it more profitable to subsidize all their units at the smallest allowable discount — for households earning 60% of area median income — rather than offering deeper discounts on a smaller number of units for the poorest 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. “If you’re going to subsidize affordable housing, you should give the money directly to tenants,” he added, referring to housing vouchers.

Some affordable housing developers say that without vouchers, it’s simply not economically feasible to build for extremely low-income people. True Ground Housing Partners, a developer in the Washington, D.C., area, illustrates the math: A unit for those earning 60% of area median income — nearly $70,000 a year — brings in $1,715 per month in rent. After $1,575 in mortgage and operating expenses, only $140 remains.

“The math does not lie,” said Carmen Romero, the company’s president and CEO. “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.”

Empty Units in Austin, Denver, and Portland

The consequences of this mismatch are visible in cities across the country. In Austin, the vacancy rate for all affordable housing is nearly 16%, according to real estate data firm CoStar. LDG Development, an affordable housing developer, cited a 12% vacancy rate for its 60% AMI units in the city.

Rebekah Fischer, LDG’s chief portfolio officer, said the company is “in direct competition” with thousands of newly built market-rate apartments. The application process for affordable housing is a significant deterrent: “I have to have every bank statement, every pay check, every bill, every Venmo transaction that you had with your friends,” she said. “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.”

Austin’s own goals tell the story. City officials set a target of building 20,000 units between 2018 and 2027 for extremely low-income people — 17% of the city’s households. Just 543 were built as of 2024. Meanwhile, all 15,000 units planned for those earning between 60% and 80% of area median income were completed.

In Denver, the affordable housing vacancy rate reached a 10-year high of about 8.8% as of January — nearly 4,000 homes — while market-rate vacancy stood at about 12%. There’s a 13% vacancy rate among 60% AMI units financed by the federal tax credit program and a 21% vacancy rate for 80% AMI units, according to the Colorado Housing and Finance Authority. Yet units for those earning 50% AMI or below have far fewer vacancies.

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

Portland resident Jaiden Barbee, who earns around 55% of area median income and is on waitlists for affordable housing, said 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.

Vouchers: An Underfunded Alternative

Experts have long argued that housing vouchers — which provide rental assistance directly to tenants — would help far more people per dollar than construction subsidies. A 1992 Congressional Budget Office analysis estimated vouchers would help 550,000 households, more than twice as many as the tax credit. Studies since 1991 have reached similar conclusions.

But the voucher system is severely underfunded. Only about one in four eligible families ever receives a housing voucher, and waitlists can stretch for years. As of 2026, 2.4 million households sit on waitlists with an average wait of seven years.

Kirk McClure, an emeritus professor of urban planning at the University of Kansas and one of the original drafters of the LIHTC, has become one of its most prominent critics. “The evidence is telling us this program is lacking its reason to exist,” he told OPB and ProPublica in June. “We should reform the program to make it work better.”

Despite decades of criticism, the program enjoys strong bipartisan support in Congress. Sen. Ron Wyden (D-Ore.) defended it as “the most successful federal housing construction program on the books for decades and the only housing program Republicans haven’t tried to gut.” Congress approved the biggest expansion of the LIHTC in decades as part of the February 2026 spending package.

A Racial Dimension

The shortage of deeply affordable housing disproportionately impacts communities of color. Eighteen percent of Black households, 16% of American Indian or Alaska Native households, 15% of Native Hawaiian or Pacific Islander households, and 13% of Latino households are extremely low-income renters, compared to just 6% of white non-Latino households.

What’s Next

For Davis, who lived in his car for a year before getting a bed in 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 the debate over how best to house America’s poorest continues, the evidence increasingly points to a fundamental mismatch: the nation’s primary affordable housing program builds for those who can nearly afford market rents, while those at the very bottom of the income ladder — who need help most — are left waiting for a solution that has yet to arrive. The question for policymakers is whether to reform the LIHTC to serve deeper income levels, dramatically expand vouchers, or pursue both — before more vulnerable Americans are left behind.