The Clock Is Running Out: LIHTC, the Affordability Cliff, and a Read on 14 Cities

Dominique Anderson

Bridging the gap between community developers & impact-minded funders 

April 22, 2026

By Dominique Anderson | Translator & Architect of Community Capital | Dominique Anderson Consulting

Somewhere in Memphis, Atlanta, Houston, or Detroit right now, a family is living in a LIHTC apartment that was built in 1994. Their rent is restricted. Their building is aging. And their affordability agreement expires within the next five years. Nobody has told them yet.

That family is not an outlier. They are the story.

There's a conversation happening in affordable housing right now that centers almost entirely on production. How many units can we build? How many credits can we allocate? How many deals can we close?

It's the wrong conversation — or at least an incomplete one.

While the industry celebrates the One Big Beautiful Bill's 12% expansion of LIHTC credit ceilings and the reduced private activity bond test, a quieter crisis is compounding underneath it: the systematic expiration of affordability on the housing we already built. The 1990s were the golden era of LIHTC production. Hundreds of thousands of units went up across this country in neighborhoods that needed them most. And those units came with a 30-year promise.

That promise is now expiring. At scale. In real time.

This is not a future problem. It is a 2026 problem.

The National Picture

The numbers are stark. More than 125,000 LIHTC units have affordability restrictions expiring by the end of 2026. Within ten years, that number climbs to nearly 800,000. By 2030, an estimated 350,000 units are expected to lose their affordability protections entirely. By 2040, the projection reaches 1 million.

Here's the architecture of the problem. When LIHTC was first enacted in 1986, it required only 15 years of affordability compliance. Congress extended that to 30 years in 1990 — which means the 1990s-era portfolio, the largest in the program's history, is hitting its expiration window right now. Adding pressure: the Qualified Contract loophole allows owners to exit affordability as early as year 15 under certain circumstances, and most states — particularly in the South and Midwest — have no statutory extension beyond the federal floor.

The One Big Beautiful Bill adds new credits going forward. It does nothing for the units expiring today.

As one housing advocate put it plainly: it's like having a boat with a hole in the bottom. You cannot build your way out of a preservation crisis.

Over half of LIHTC households earn less than 30% of AMI. For those families, even a modest rent increase after a property exits compliance is not a nuisance; it is a displacement event. And lenders have grown hesitant to make preservation commitments amid policy uncertainty, precisely when preservation capital is most urgently needed.

Capital strategy doesn't replace LIHTC. It makes LIHTC viable and [the] project survivable when LIHTC isn't enough or isn't available at all.

What This Looks Like on the Ground: 14 Cities

The affordability cliff is not abstract. It has addresses. Here is what it looks like in fourteen cities I know, have worked in, or have studied closely.

THE MIDWEST

Cleveland

Cleveland may be the most acute case among mid-sized cities right now. In 2024, Cleveland posted the largest year-over-year rent increase among major U.S. metros at 10.6%, and the region has just 25 affordable and available homes for every 100 extremely low-income renter households, a deficit of roughly 58,000 units. LISC Cleveland and Mayor Bibb responded with the Cleveland Housing Investment Fund, targeting $100 million in flexible gap-closing capital to create between 2,500 and 3,000 affordable units. The fund's explicit orientation toward layered debt — not LIHTC equity — signals that Cleveland's own leadership understands that the tax credit program is insufficient infrastructure by itself.

Detroit

Detroit's challenge is a preservation crisis hiding inside a revitalization narrative. The city's 2025–2030 Affordable Housing Strategy sets a goal of preserving 10,000 affordable units alongside constructing 3,000 new ones, a ratio that says everything about where the real pressure is. As neighborhood values rise, city leadership has acknowledged that longtime residents face mounting displacement risk, leading to public-private preservation deals using HOME funds, ARPA dollars, historic tax credit equity, and mission-driven lending. Not a single-source LIHTC transaction in sight. That's not a workaround. That's capital strategy.

THE UPPER SOUTH

Memphis

Memphis is a city where over 53% of residents are renters, and the safety net is already fraying. The Memphis Housing Authority Section 8 waiting list closed after being open for just three days in July 2025, and as of early 2026 remains closed , with an average wait time of 27 months. The average one-bedroom rent has reached $1,205 per month, more than double the income-restricted rates available through federal programs. Tennessee extends affordability to 30 years but has no state mandate beyond that, and THDA's allocation is modest, meaning preservation deals compete directly against new construction for the same limited credits. When LIHTC properties exit compliance without preservation capital in place, there is no voucher backstop to catch displaced residents.

Nashville

Nashville is the most paradoxical city in this analysis, simultaneously one of the strongest LIHTC production markets in the South and one of the most threatened by LIHTC's own design. Davidson County has over 10,000 LIHTC homes in operation, built largely on 4% credit production. But that scale creates proportional exposure: every one of those properties carries a 30-year clock, and Nashville's explosive growth means the market pressure on expiring units is among the highest in the region. Eviction filings have surged above pre-pandemic levels, and displacement is occurring through economic pressure as rising home prices outpace local incomes. The qualified contract loophole is a specific structural vulnerability: after year 15, owners can initiate QC review, and if THDA cannot find a preservation buyer within one year, the property is released from its affordability covenant entirely. Nashville's Unified Housing Strategy is pushing for 50- to 99-year affordability commitments on new deals, but the 10,000 units already in operation under standard 30-year terms are running on borrowed time in one of the hottest land markets in the country.

Louisville

Louisville represents the quiet version of this crisis, a mid-sized city without dramatic rent spikes, but one where the structural erosion of affordable housing is happening steadily, and the fiscal tools to fight it are being actively constrained. Jefferson County Public Schools identified 3,951 unhoused students during the 2024–2025 school year, a 13% increase even as enrollment declined, while the county has averaged nearly 12,000 eviction filings per year since 2022. The Louisville Affordable Housing Trust Fund has put more than $120 million toward housing creation since 2008, but the federal pass-through funding that once supported it has collapsed. One veteran practitioner recalled $20 million a year arriving from the federal government; now those streams total less than $5 million. Meanwhile, a Kentucky bill moving through the legislature would strip local zoning boards of authority to approve multi-family developments and extend a moratorium preventing Louisville from making any zoning code changes for another two years. The will exists at the local level. The tools are being stripped away at the state level, precisely as expiring LIHTC stock reaches its 30-year mark.

THE DEEP SOUTH

Birmingham

Birmingham is the clearest example of what happens when a city faces the affordability cliff without the market heat to force conversion, but also without the fiscal infrastructure to get ahead of it. Alabama has only 74 affordable and available homes per 100 renter households at 50% of AMI, a structural shortage that LIHTC has long been asked to fill in a state with no affordability extensions beyond the federal baseline. The risk isn't gentrification pricing people out. It's deferred preservation pricing properties out of habitability, with no replacement capital on standby. Mayor Woodfin's 2026 legislative agenda proposes a Birmingham Housing Trust Fund to protect working families from displacement as neighborhoods see new investment, but it remains a proposal moving through the Alabama Legislature, not yet a capitalized tool.

New Orleans

New Orleans presents the most layered crisis in this analysis because the affordability problem is not just about expiring restrictions, it's about a city that never fully rebuilt its affordable housing stock after Katrina, and is now watching what remains slip away. New Orleans currently needs approximately 44,000 additional affordable rental units, yet only 239 new units were added in the past year. More than 40% of households spend more than half their income on rent, and family homelessness has surged 69% in the last two years. Voters approved a Housing Trust Fund in November 2024, dedicating approximately $17 million annually to affordable housing, but that plan is built on a projected budget while the city simultaneously faces a $100 million deficit and proposed 11% budget cut. Political will and fiscal reality are converging at the same moment as the expiration of the 1990s-era LIHTC stock.

Atlanta

Atlanta is where the affordability cliff meets one of the fastest-appreciating real estate markets in the South, and the collision is already happening. More than 4,000 of Atlanta's 11,000 LIHTC-funded units will see their affordability restrictions expire by 2030, with the largest concentration in southern and southeastern neighborhoods where home prices have climbed more than 50% over the past five years and rental need is already acute. Georgia has no state law extending affordability beyond the federal 30-year minimum, leaving no backstop once the clock runs out. Elevated property tax assessments on LIHTC properties outside the city and surging insurance premiums have sharply increased operating costs, making preservation financially harder even before a unit exits compliance. Atlanta is a city where LIHTC did significant work, and where the absence of a state preservation mandate is now a structural liability.

Jackson, Mississippi

Jackson is the equity argument made visible. Mississippi is short more than 52,000 affordable and available rental homes for low-income people, one of the deepest gaps in the country relative to population. Jackson has 180 LIHTC properties serving the city, many of them aging 1990s-era stock now approaching or at their 30-year window, in a market where low rents mean conversion pressure is minimal but physical deterioration is severe. The preservation ecosystem is thin, with minimal CDFI presence, limited trust fund infrastructure, and a state that has not built the policy or capital scaffolding to intercept expiring units at scale. The $117 million Jackson Trio deal in 2025, which preserved 613 units across three aging LIHTC properties, is a powerful proof point, but it also illustrates the magnitude of what's required: a single complex transaction requiring LIHTC equity, bridge loans, Fannie Mae permanent debt, and Housing Authority partnership just to hold the line on three properties. Multiply that complexity by 180, and you understand the scale of what Jackson faces without a preservation capital ecosystem.

THE SOUTHEAST COAST

Durham

Durham may be the clearest example of what happens when a legacy affordable-housing city becomes a growth market. With growing interest from tech and healthcare industries, the Research Triangle's real estate market has become increasingly unaffordable, and LIHTC projects in Durham are providing critical but shrinking relief to low-income families. Durham County accounts for 8% of North Carolina's entire at-risk LIHTC portfolio, concentrated in neighborhoods where market rents now far exceed what restricted units were designed to hold. Across NC, over 15,000 affordable units- 16% of the state's entire LIHTC portfolio -are expected to age out of mandated affordability over the next decade, and 9,533 units have already lost their protections. At-risk projects are concentrated in metro counties and are mostly owned by for-profit developers.

Tampa

Tampa is the clearest case of what happens when a Sun Belt migration boom lands on top of a stressed affordable housing stock with expiring LIHTC protections and no state preservation mandate. Florida has no statutory extension of affordability beyond the federal 30-year floor, and the state's preemption posture has historically limited cities' ability to create their own preservation tools. Tampa stands to lose nearly 1,000 affordable housing units by 2032 as its original affordability agreements expire, a countdown colliding with post-hurricane displacement from Helene and Milton, surging insurance costs, and one of the most rapid rent escalations in the Southeast. City planning leadership has acknowledged that demand will only grow, but streamlined permitting and updated land codes are supply-side interventions that do nothing to protect the units already in the ground.

Charlotte

Charlotte carries the second-largest concentration of expiring LIHTC stock in North Carolina, representing 10% of the state's at-risk portfolio. The hourly wage required to afford a two-bedroom apartment in the Charlotte metro has reached $35.08, nearly $8 above the North Carolina statewide housing wage, and more than 150,000 households are considered vulnerable to displacement in neighborhoods where rapid investment is reshaping the market. The Charlotte Housing Opportunity Investment Fund, managed by LISC, has supported the creation and preservation of nearly 2,000 affordable units since its launch, a meaningful start, but a fraction of what the expiration wave demands. Charlotte is a city building the right tools in real time, racing against a clock that started running thirty years ago.

TEXAS

Texas occupies its own category in this analysis. The state's sheer scale, its LIHTC production volume, the absence of mandatory affordability extensions, and the compounding weight of repeated natural disasters make it less a regional story and more a system stress test. Two cities tell the Texas story- one through data, one through disaster.

Dallas

Dallas is where Freddie Mac chose to study what happens after LIHTC exits, and what the research found was sobering. The city's own Housing Needs Assessment documents that between 400 and 1,000 LIHTC units lose their 30-year rent-restricted status in Dallas every single year, while the city added only about 400 new income-restricted units annually between 2017 and 2023, one of the lowest rates per capita among major U.S. cities. Dallas has over 7,700 homes at risk of losing their affordability restrictions by 2033, and more than 16,500 across all subsidized programs by 2043. The Bush Institute–SMU analysis is clear: Dallas has lost much of its affordability edge, the development of income-restricted apartments fell more than 80% in recent years relative to prior cycles, and the city has no meaningful preservation policy infrastructure to intercept the wave of expiring stock. Production is running a deficit against expiration before a single unit converts.

Houston

Houston carries the disaster overlay that makes its preservation challenge unlike any other city in this analysis. Hurricane Harvey alone depleted nearly 25% of Houston's existing affordable housing stock in 2017, and the LIHTC allocation that followed redirected significant state credit authority toward disaster recovery, meaning preservation of aging pre-Harvey stock competed directly with emergency rebuilding for the same limited resources. The Kinder Institute now rates Houston's housing affordability as "at risk," strained by compounding factors including flooding, insurance costs, and income gaps. In Harris County, over 4,000 LIHTC units could lose their affordability status within five years. Texas incentivizes but does not require extended affordability periods beyond 30 years in its QAP, meaning a significant portion of Houston's 1990s-era portfolio is approaching expiration without a mandated extension. The question for Houston is not just whether the units will convert, it's whether the preservation capital ecosystem, strained by a decade of disaster response, has the capacity to hold the line.

The Through-Line

Taken across all 14 cities, a clear and consistent pattern emerges.

In growth markets — Atlanta, Nashville, Tampa, Charlotte, Dallas — expiring LIHTC stock gets converted because owners can extract value from the market. In legacy and moderate markets — Detroit, Cleveland, Louisville, Birmingham, Memphis, Jackson — it deteriorates because owners can't afford to exit. In disaster-overlay markets — Houston, New Orleans — the preservation pipeline was already consumed by crisis before the expiration wave arrived. And in rapidly growing Southern metros — Durham, Charlotte — legacy stock and new-market pressure are arriving simultaneously from opposite directions.

In every case, the common denominator is the same: LIHTC was designed as a production tool. The country built a generation of affordable housing on a 30-year promise with no automatic renewal mechanism, no preservation capital reserve, and in most of these states, particularly across the South and Midwest, no policy backstop once the clock runs out.

The OBBBA adds credits going forward. Novogradac estimates those changes could finance 1.22 million additional affordable rental homes over the next decade. That is meaningful. But the country cannot address its supply shortage when it is losing as many affordable homes through lack of preservation as it is building.

Georgia, Alabama, Florida, and Tennessee have no state-level affordability extensions. Louisiana has procedural protections but a broken fiscal picture. Mississippi and Kentucky lack the preservation capital infrastructure to match the scale of the problem. North Carolina's own Housing Finance Agency has sounded the alarm. Texas incentivizes but does not mandate. In none of these states does the current policy environment meet the moment.

What Capital Strategy Has to Do With It

This is where the conversation has to shift.

Preservation deals are not new construction. They require a fundamentally different capital architecture, layered, patient, mission-aligned, and built to hold properties in affordability rather than capture value from them. The tools exist: 4% LIHTC paired with tax-exempt bonds, HOME funds, Housing Trust Fund dollars, CDFI first-loss capital, impact equity, community land trust structures, and ground leases. What is missing is the intentional design of capital stacks that make those tools work together, before the expiration clock runs out, not after.

That is exactly the gap that capital strategy is built to fill.

A well-structured preservation capital stack doesn't wait for a property to exit compliance before trying to recapitalize it. It identifies properties 3–5 years before expiration, assesses physical condition and owner motivation, lines up soft capital and gap financing, and secures new affordability commitments before the restriction lifts. That requires someone who knows how to read a capital stack, speak the language of every capital source at the table, and design a deal structure that works for mission-driven owners, CDFIs, impact investors, and community stakeholders simultaneously.

Capital is not neutral. But in preservation, it is also not optional.

The 30-year promise made to residents of these 14 cities, and hundreds of others across this country, is running out. The question is whether the capital ecosystem will be organized, resourced, and strategically deployed in time to honor it.

That work is already underway. But it needs to accelerate, and it needs translators

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Dominique Anderson is the founder of Dominique Anderson Consulting (DAC), a capital strategy consulting practice serving community developers, CDFIs, and mission-aligned funders across the South and beyond. She is also the co-founder of GrowthCommons (growthcommons.co), a capital marketplace connecting community developers with mission-aligned capital. Learn more at dominiqueandersonconsulting.com.

Capital is not neutral. But it can be just.