Opting In, Opting Out: A Decade Later

Abstract

This article updates the U.S. Department of Housing and Urban Development (HUD) report Multifamily Properties: Opting In, Opting Out and Remaining Affordable (Finkel et al., 2006). The original report examined the loss of affordable housing associated with HUD's Section 8 project-based rental assistance and Section 236 and 221(d)(3) subsidized mortgage programs between 1998 and 2004. It found that properties with low rents compared to the surrounding Fair Market Rent (FMR), that serve a family population, and that are owned by for-profit corporations were particularly at risk for loss of affordability. The analysis is updated here for the period 2005 to 2014. It shows that more owners made active decisions to opt in to Section 8 assistance in the latter period, while HUD's older subsidized mortgage programs were largely being phased out. Factors such as forprofit ownership and low rent-to-FMR ratios continued to be associated with higher risk of loss of affordability, but these factors were less influential from 2005 to 2014 than in the original study. The article also explores the use of the Low-Income Housing Tax Credit Program and HUD refinancing to preserve affordability in Section 8 developments. The analysis finds that these preservation tools are associated with extended affordability for thousands of HUD-assisted properties. Additional preservation initiatives and improved targeting may be needed to preserve other HUD-assisted properties, particularly smaller developments in strong real estate markets.