Sunday, May 04, 2008

A Back Door Hit to Affordable Housing

Let's face it, affordable housing is expensive. For developers and lenders, that is. The margin simply isn't there, so affordable housing wouldn't get built without incentives to give it a boost. The biggest boost has been tax credits and deductions. The problem is that credits are valuable only if there are taxes to credit against, and deductions valuable only if there are profits to deduct from. As you may have noticed, profits have been a little thin on the ground for developers and lenders lately. Consequently, they're abandoning affordable housing projects they only got into for the tax breaks. So not only has the credit crunch taken a significant percentage of the population out of the purchasing market, and not only are rents shooting up because of the sudden increase in demand, but the affordable housing in the pipeline is contracting. That means the affordable housing run-out from this downturn will be with us for several years at least.

Hey, maybe they can take the dark space in the malls and convert it to housing units.

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