According to this article in the Star Tribune, they’re both reaping the benefits of investing in Minneapolis’ booming affordable housing market. As we’ve written before, rentership rates have been rising lately, while ownership rates have been dropping. With this increased demand for all types of rental housing comes an increased demand for affordable rental housing—a demand that was high even before the recent rentership trend.
As Americans turn in even greater numbers to rental housing, investors see the affordable housing market as a less risky alternative to more volatile investment options like the stock market or other forms of commercial real estate. One of the reasons affordable housing investment is coming into favor with investors--Federal Low-Income Housing Tax credits (LIHTC), which developers use to finance affordable housing developments for low-income individuals, equate to a safe investment option. Under the LIHTC program, developers of qualified projects sell these credits to investors to raise capital for their projects, reducing the debt that the developer would otherwise have to borrow. Investors receive a dollar-for-dollar credit against their federal tax liability each year over a period of 10 years. (For more information on the LIHTC program, see the U.S. Department of Housing and Urban Development’s website.)
