To illustrate this problem, we examined data from the Denver metro area, which is experiencing a growth in rental housing demand but is not a traditionally high-cost city. In many places, the rent the poorest families can pay is too little to cover the costs of operating an apartment building, even if developers could build that building for free. ![]() The problem is even more difficult when you consider the poorest residents. The gap between the amount a building is expected to produce from rents and the amount developers will need to pay lenders and investors can stop affordable housing development before it even begins, leaving few options for the millions of low-income families looking for safe, affordable homes. But developers can only get those loans and equity sources if the development will produce enough revenue to pay back the loans and pay returns to investors. Developers rely on loans and other sources to fund construction before people move in and start paying rent. This tool helps explain why.ĭevelopment costs a lot of money. Without the help of too-scarce government subsidies for creating, preserving, and operating affordable apartments, building these homes is often impossible. ![]() In fact, there is a huge gap between what these buildings cost to construct and maintain and the rents most people can pay. It turns out building affordable housing is not particularly affordable. ![]() With such high demand, why aren’t developers racing to build affordable apartments? That means two parents who both work minimum-wage jobs might wait years to find a safe, affordable place to live with their two kids. There is not enough affordable housing in the United States.įor every 100 extremely low income households, there are only 29 adequate, affordable, and available rental units. The cost of affordable housing: Does it pencil out?
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