Why thousands of US affordable homes are sitting vacant while renters remain homeless

File photo: An affordable housing community in DenverThousands of homes classified as affordable are sitting vacant in US cities even as some of the country's poorest renters struggle to find housing they can afford.In Austin, Texas, more than 4,500 affordable housing units, nearly 16% of the total classified as affordable, are vacant, according to real estate data and analytics firm CoStar. A healthy vacancy rate is around 5%.Yet people at the lowest end of the income scale face a severe shortage of suitable homes. Mathew Davis, a 49-year-old Austin resident living in a homeless shelter, said even a $450-a-month tiny home with no running water and a communal bathroom would be difficult for him to afford because he earns only a few hundred dollars a month from donating blood plasma."I don't make enough money really to afford anything," Davis said, as quoted by news agency AP. "I just keep trying to swim uphill", he added.The situation highlights a gap within the US affordable housing market: a large share of subsidised homes is targeted at households earning 50% or more of an area's median income, while the poorest renters have far fewer options.Affordable homes out of reach for poorest rentersThere are about 4 million affordable rental homes available for roughly 11 million extremely low-income renter households in the US, according to the National Low Income Housing Coalition's most recent annual report.These households have annual incomes below the federal poverty guidelines — just under $16,000 for a single-person household — or 30% of the median income in their area, whichever is higher.They account for about a quarter of US renter households and include low-wage workers, seniors and people with disabilities living on fixed incomes.About three-quarters of extremely low-income renter households spend more than half their income on rent and utilities, according to the report.However, homes designated for these renters accounted for only about 12% of the affordable housing units financed in 2024 through the Low-Income Housing Tax Credit, according to figures from the National Council of State Housing Agencies.The federal tax-credit programme provides tax credits to developers in exchange for keeping rents low for at least 30 years. It has financed nearly 4 million affordable units nationwide since its creation 40 years ago.The majority of those units are intended for households earning at least 50% of the area's median income, or AMI.In Austin, that threshold is roughly $47,000 a year for a single person, compared with less than $28,000 for an extremely low-income person.Vacancies rise as affordable rents near market ratesThe affordability gap is also showing up in vacancy rates.In cities such as Austin, Denver and Portland, Oregon, rents for some affordable housing aimed at households earning 60% of AMI are approaching market-rate rents.That has left some renters choosing market-rate apartments, where approval can be quicker and income verification less demanding.In Austin, LDG Development reported a 12% vacancy rate for its 60% AMI units. Chief portfolio officer Rebekah Fischer said the company was "in direct competition" with thousands of new market-rate apartments recently built in the city.Affordable housing applicants face extensive income-verification requirements, Fischer said."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."In Denver, the vacancy rate among 60% AMI units financed through the federal tax-credit programme was 13%, while it was 21% for units aimed at households earning 80% of AMI, according to the Colorado Housing and Finance Authority.At the same time, the city has too little housing for its lowest-income residents.Portland had more than 1,700 vacant affordable units, giving it an overall affordable-housing vacancy rate of 7.5%, according to the Portland Housing Bureau. Most of those units were aimed at households earning 60% of AMI, or about $54,000 for a single-person household, with rent capped at $1,444 a month.That was close to the average rent of $1,581 for a one-bedroom market-rate apartment, according to CoStar figures shared by the bureau.Portland resident Jaiden Barbee, who earns around 55% of the area's median income and is on affordable-housing waitlists, said he would 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.Developers say serving poorest renters needs more subsidyThe economics of building housing for extremely low-income households remain difficult for some developers.True Ground Housing Partners, an affordable housing developer in the Washington, D.C., area, said a unit for households earning 60% of the area's median income — nearly $70,000 a year — generates $1,715 a month in rent.After mortgage and operating expenses of $1,575, only $140 remains."The math does not lie," said Carmen Romero, the company's president and CEO.She said an extremely low-income renter would pay only about half that rent."Our expenses don't make it really possible to create a 30 per cent AMI unit, unless there was this extraordinary amount of subsidy that just doesn't exist," Romero said.Some experts have criticised the Low-Income Housing Tax Credit programme as inefficient and more expensive than housing vouchers.Chris Edwards, an economist at the Cato Institute, said the programme was "enormously complex and bureaucratic" and argued that subsidies should instead be given directly to tenants through housing vouchers.Other experts cited by AP said the two systems complement each other because tax-credit properties are required to accept vouchers, while landlords of market-rate apartments in many states are not.But there is also a major shortage of vouchers. Experts estimate that only one in four eligible families receives one, and waiting lists can stretch for years.Some affordable housing developers have said that without vouchers, providing units for extremely low-income renters is not economically feasible.Austin builds for higher-income groups but falls short at the lowest endAustin's housing figures illustrate the disparity.The city had set a goal of building 20,000 units between 2018 and 2027 for extremely low-income residents, who account for 17% of the city's households.By 2024, only 543 such units had been built, according to city documents.In contrast, all 15,000 units planned for households earning between 60% and 80% of AMI had been built.The Austin housing department told The Associated Press that it recognised the need to produce more housing for the poorest residents. It said the city was taking steps to address the issue, including giving preference to funding proposals that include 30% AMI units.For Davis, who lived in his car for a year before getting a bed at an Austin shelter, the shortage has left him searching for a place he can afford."I want to shut the door at night and be able to sleep," he said. "I really just want to find the right place."