CohnReznick’s credit study offers something the affordable housing industry rarely gets anywhere else: a unified view of how thousands of properties across the country are actually performing. In a sector defined by decentralized oversight, varying market conditions, and countless local variables, the consistency of this study has made it a cornerstone for benchmarking, underwriting, and long-term planning.

The latest edition arrives at a particularly important moment. After several years of economic volatility, construction delays, rising costs, and persistent housing shortages, stakeholders are seeking clarity about how the portfolio is absorbing these pressures, and what the trends might signal for the future.

While the full report and on-demand webinar(Opens a new window) walk through the complete analysis, the following preview highlights several themes that stand out this year and invites readers to dig deeper into the data and its implications.

A program shaped by scale and by the need for standardized insight

The credit study began more than 25 years ago as an attempt to bring visibility to an industry. The first edition covered just over 6,000 properties in a $4 billion annual equity market. Today, the LIHTC ecosystem is roughly seven times that size, and the study draws from a dataset of more than 30,000 projects nationwide.

This scale matters. Hundreds of developers, dozens of housing finance agencies, multiple syndicators, and over a hundred repeat investors participate in the LIHTC program each year. No single entity can meaningfully interpret national trends without standardized data. The credit study fills that gap, offering consistent performance benchmarks that inform investment policies, underwriting assumptions, asset management strategies, and even housing legislation and advocacy efforts.

A resilient portfolio, yet operating under elevated pressure

The headline finding in this year’s study is one that continues to reinforce the structural strength of the LIHTC program: no foreclosures were reported amongst our data providers during the most recent four-year period. This adds to a long history of extremely low foreclosure incidence, supported by layered mitigants such as reserves, guarantees, and hands-on asset management that intervene early and often. But resilience should not be mistaken for uniform stability. Several indicators illustrate a portfolio absorbing more pressure than in previous years. Watch-list representation has reached a historic high, reflecting both economic underperformance and broader operational challenges. Properties still navigating construction, lease-up, or pre-stabilization are appearing more frequently in elevated-risk categories, often due to delays, rising costs, or prolonged conversion timelines. Even the stabilized segment, traditionally the steadiest portion of the portfolio, has seen watch-list designations increase for a third consecutive year. These patterns suggest a clustering of stress in certain markets, property types, and development phases.

Occupancy and collections: Strong demand above the surface, variability beneath it

One of the clearest signs of demand for affordable housing is the study findings that physical occupancy remains near 97% nationally, consistent with both historical norms and the structural shortage of housing across the country. Properties, for the most part, remain full. Yet physical occupancy tells only part of the story. Economic occupancy for the portion of scheduled rent collected reveals more strain. A growing share of properties are performing below 90% economic occupancy, and a smaller but meaningful subset falls below 80%. These figures highlight the continuing influence of collection loss and economic instability among residents. In fact, nearly half of all states report that at least a quarter of their properties fall below typical underwriting expectations for economic occupancy. This widening gap between “occupied” and “performing” reinforces an essential point: in today’s environment, full buildings do not guarantee full financial health. 

Operating performance: Navigating margin compression

While some indicators such as debt service coverage and per-unit cash flow (i.e. NOI net of must pay debt and replacement reserve contributions) showed slight improvement over the previous year, the operating environment remains challenging. Roughly one in four properties continues to operate at or below break-even, and performance varies significantly by state. The most persistent headwind is the continued escalation of operating expenses. Many portfolios reported 5–10% growth year-over-year, and watch-list properties saw increases above 10%. Several expense categories: insurance, payroll, administration, and repairs and maintenance, are rising faster than what has typically been underwritten. For the first time, median gross operating expenses surpassed $8,000 per unit at the national level. These pressures have implications for underwriting, reserve planning, and long-term asset management strategy. 

Understanding timing risk

Another trend drawing attention this year involves the timing of credit delivery which is heavily influenced by construction and lease-up delays. Historically, the industry made steady progress in improving early-year credit delivery performance. However, funds closed between 2020 and 2023 show greater delays in delivering credits during the first three years, a reflection of construction slowdowns, labor shortages, supply chain disruptions, and cost escalation. For investors and syndicators, the question is no longer simply whether delays exist, but how they vary by market, whether they appear to be temporary or structural, and how underwriting assumptions may need to adapt. 

Operating and fund-level reserves

Rising operating deficits have prompted more frequent use of operating reserves, with recent survey responses indicating that 3–15% of stabilized properties accessed reserve funding in the past two years. Although this represents an increase over historical norms, reserve usage remains manageable, and for many properties, reserves have served exactly the purpose for which they were designed. Meanwhile, fund-level reserves, often structured as 1–1.5% of investor capital, remain largely intact, providing an additional cushion when project-level challenges arise. These reserves continue to be a defining feature of the LIHTC program’s long-term stability, and a differentiator compared with other real estate asset classes.

An expanded toolkit for benchmarking: Introducing the interactive Credit Tool

Alongside the study, stakeholders now have access to an interactive state and county-level credit  tool designed to make performance data more accessible and operationally useful. The tool allows users to:

• View risk rating distributions
• Examine 10 years of operating metrics (occupancy, DCR, cash flow)
• Explore operating expense patterns and inflation trends
• Export data for underwriting and review

Because county-level data is included only where statistically meaningful, the tool balances transparency with confidentiality, offering a starting point for deeper analysis and conversations about local market dynamics.

Guiding questions

This preview captures only a portion of the insights available in the full report and on-demand webinar(Opens a new window). As stakeholders explore the complete findings, several questions may help frame next steps:

• How does your portfolio’s economic occupancy compare with local and national benchmarks?
• Are rising expense trends reshaping your underwriting assumptions or reserve strategies?
• How concentrated is watch-list activity across your markets or property types?
• What adjustments may be needed in light of changing credit delivery timelines?
• How effectively are your current reserves positioned to absorb emerging operating deficits?

These questions can help organizations begin translating the study’s national insights into local decisions and forward-looking strategies.