CohnReznick publishes 2023 Affordable Housing Credit Study

Tax credit properties continue to demonstrate resilience to challenging economic conditions

November 14, 2023 (New York, NY) – CohnReznick, one of the top advisory, assurance, and tax firms in the country, and a national leader in affordable housing, today announced the publication of its 2023 Affordable Housing Credit Study.

The study is the latest in a biennial series of reports tracking the performance of affordable housing properties financed with federal low-income housing tax credits (LIHTCs). It provides affordable housing industry with comprehensive data, analysis, and insight into critical performance trends across a surveyed portfolio gathered from more than 30,000 housing tax credit properties.

With industry-wide operating and performance data current through year-end 2022, the 2023 Affordable Housing Credit Study demonstrates that, despite the ongoing economic challenges that have impacted many other sectors, the housing tax credit market continues to be resilient.

Study Highlights

Based on the information provided back to CohnReznick, key findings include:

  • Most properties financed with housing tax credits are fully occupied, with healthy financial performance and extremely low foreclosure rates. The national median physical occupancy rate has been consistently high and within a 96.4% to 97.9% range. In 2022, only 7.6% of the portfolio was less than 90% physically occupied due to reasons that were most often property specific.
  • Some indicators signal that the affordable housing portfolio is not completely immune from the broader headwinds that the national economy is facing in the post-pandemic era. There was an increase in “watch list” properties compared to prior survey periods reported by our data providers, who generally follow criteria adopted by the Affordable Housing Investors Council (AHIC) as a baseline for measuring underperformance.
  • While the watch list rose across properties in all life cycles, those that underwent construction during the height of the COVID-19 pandemic reported the highest watch list representation. 
  • Rent collection losses and operating expense spikes were two primary reasons that caused 23% of the stabilized housing credit properties to operate at below breakeven in 2022.
  • Respondents to CohnReznick’s survey report a 0.50% cumulative foreclosure rate with no new foreclosures reported in 2021 or 2022. This is attributable to the few housing tax credit properties  suffering from significant underperformance.

“Despite the uncertainty of today’s global economy, investors in housing tax credits continue to enjoy stable, predictable returns,” said Cindy Fang, Partner and Tax Credit Investment Services Leader. “While there are some lingering effects of the COVID-19 pandemic as well as broader challenges that the commercial real estate market at large is facing, our Affordable Housing Credit Study results continue to reinforce the positive trends we have noted in earlier studies – the ongoing demand for affordable housing – coupled with the highly effective manner in which these properties are constructed and managed.”

Beth Mullen, CohnReznick Affordable Housing Industry Leader, adds, “Despite the softness many had predicted now occurring in other sectors of the real estate industry, affordable housing continues to demonstrate how it can prevail regardless of broader economic trends. With our Affordable Housing Credit Study providing evidence of the industry’s ability to maintain high production and occupancy rates, and low foreclosure rates, we continue to be bullish on the future of affordable housing and the Low-Income Tax Credit Program.”

To complement the study, CohnReznick also released its newest dataset called the Affordable Housing Credit Tool. Users can access interactive data through an online interface providing the most recent data. Together, the Affordable Housing Credit Study and Credit Tool help the affordable housing community benchmark portfolios, develop best practices, and gain further insights into the industry. 

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2023 Affordable Housing Credit Study and Credit Tool

The latest in our biennial series, provides comprehensive data and analysis into performance trends observed across a surveyed portfolio of affordable housing properties financed with federal low-income housing tax credits (LIHTCs). Use it to benchmark portfolios, develop best practices, and gain insights into the affordable housing industry. Plus, use our interactive Credit Tool to explore data for historical national, state, and county-based operating performance trends.

Get in touch with our specialists

View All Specialists
Fang Cindy

Cindy Fang

CPA, Partner, Tax Credit Investment Services Leader, Project Finance & Consulting
Barcello Matt

Matthew Barcello

Managing Director, Project Finance and Consulting Practice

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