The economics of affordable housing: income-restricted rents, LIHTC, inclusionary requirements and the gap between required rent and affordable rent.
“Affordable housing” in the policy sense means homes with rents restricted to a share of area median income, not simply housing that is inexpensive. The distinction matters because a restricted rent does not change what the building costs to build or operate. Someone has to cover the difference between the rent the building needs and the rent it is allowed to charge, and the entire field of affordable housing finance is about who that someone is.
Articles here explain how the gap is measured, how tax credits, subsidy and inclusionary requirements attempt to fill it, and what each approach costs per unit. We treat market-rate and affordable housing as two products with the same cost structure and different revenue rules, because that is how the arithmetic sees them.
Public capital can lower the rent a new building needs to charge, and the same rent-math shows exactly where the saving comes from and who pays for it.
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