Building of low-cost homes has dropped by more than half in two years. Partially to blame is a prevailing disinterest in government subsidized tax credits. In prior years companies such as Fannie Mae, Freddie Mac and the Banking industry purchased coveted tax credits from developers who were awarded the credits by the government. As large financial companies are now battling with losses as opposed to gains these tax credits are no longer as valuable – thereby depriving developers of the required cash to get their projects off the ground.
For thousands of low-income renters nationwide — but especially in rural towns and small cities — the recession is hitting home in an unexpected way.
Nationwide, funding to build low-cost apartments has dropped by more than half in two years to $4 billion. Hundreds of projects can’t get off the ground because the federal tax credits that help offset development costs are currently worthless to traditional investors.
Read the full article “Financial crisis cripples new affordable housing” at MSNBC (August 28, 2009).