Affordable Housing Construction Hit a 10-Year High, Capping a Remarkable Five-Year Surge
For years, the message from desperate renters has come through loud and clear: we can't afford to rent an apartment at current prices: do something about it! Now, it seems, builders are beginning to take up that challenge.
Affordable apartment construction reached its highest level in 10 years in 2024, according to a new analysis by RentCafe, with 91,000 units completed – a record. The surge made 2024 a defining moment in the recent building cycle, RentCafe declared.
It capped a five-year streak in which nearly 310,000 such units hit the market – a 73% increase over the previous five years 2015 to 2019. By comparison, overall apartment construction grew by just 36% in the period.
The fastest growth was recorded in San Antonio, Phoenix and Charlotte. But the number of units delivered was highest in Seattle and New York, as well as fast-growing metros like Austin and San Antonio.
The 2024 figures are a sharp jump from 2023, when 68,000 units were completed, in itself an increase from the 2022 figure of 57,900. In 2024, almost 14% of apartments were rent-restricted, compared to 9% a decade earlier.
The report defined "fully affordable" housing as "residential buildings in which all units are income-restricted, meaning rent is set so that it does not exceed 30% of the area median income. These buildings are typically operated by local housing authorities or nonprofit organizations and are designed to provide long-term affordability," it stated. The report does not cover partially affordable developments that contain a mix of income-restricted and market-rate units.
Between 2020 and 2024, Seattle emerged as the metro with the greatest number of new affordable apartments. In the period, the metro had a 39.7% increase to 14,290 in affordable housing deliveries, representing a 24.2% share of total completions.
New York was hard on Seattle's heels, with 14,240 new entrants – a staggering 185.26% increase in the period to 31.7% of all apartment completions in the metro.
In Austin, the increase was 142.3% with 13,343 new affordable apartments. Fourth were the Twin Cities, with an 85% increase to 10,722. Atlanta came in fifth, with a 153.35% increase to 10,486. Others in the top 10 of the 146 cities analyzed were Denver, Los Angeles, the Bay area, San Antonio and Miami.
San Francisco, at 34.06%, had the largest share of affordable apartments as a percentage of total completions, followed by New York City and San Antonio at 23.6%.
The report credited the American Rescue Plan Act signed into law by President Biden with helping to promote affordable housing by assisting developers to cover rising costs while keeping rents in check. The legislation provided more than $21.5 billion in emergency rental assistance to help families pay rent and remain in their homes during the Covid epidemic. The program was terminated in 2025 under President Trump.
In addition, many states introduced or expanded their own tax credit programs for affordable housing.
Low-Income Housing Tax Credits (LIHTC) also play a role. Once restricted to families with incomes below 60 percent of the area median income (AMI), the program now permits income averaging. It allows averaging incomes from 30% to 80% AMI in a project, as long as the average stays below 60% AMI.
This change gave developers more flexibility by allowing a wider range of income levels across units, while still maintaining affordability requirements, the report said.
Source: GlobeSt/ALM