Affordable Housing Sits Empty as Poorest Renters Struggle

The Lowest-Income Housing Gap

The poorest renters in the US are facing an unusual mismatch: affordable housing is sitting vacant in some cities even as extremely low-income households struggle to find a place to live.

The Associated Press reported on September 7 that thousands of income-restricted units in cities including Austin, Denver, and Portland are going unleased because rents and application requirements remain out of reach for the households they are intended to serve.

The National Low Income Housing Coalition’s 2026 report estimates that only about 4M affordable rental units are available for 11M extremely low-income renter households. About three-quarters of those households spend more than half their income on rent and utilities, underscoring the scale of the gap.

The Details

The mismatch is becoming more visible as rents for 60% AMI units approach market-rate pricing. In Austin, more than 4,500 affordable units were vacant. That produced a vacancy rate of nearly 16%, according to CoStar data cited by the AP. A healthy vacancy rate is around 5%.

LDG Development reported a 12% vacancy rate for its 60% AMI units in Austin. The company said it competes directly with new market-rate apartments.

Income-restricted properties can also require more documentation. Approval can take longer than at market-rate properties. That makes market-rate housing more attractive to some renters who can afford slightly higher rents.

Portland shows a similar pattern. More than 1,700 affordable units were vacant. The overall affordable-housing vacancy rate was 7.5%, according to the Portland Housing Bureau.

Most of those units served households at 60% AMI. Rents were capped at $1,444. The average market-rate one-bedroom cost $1,581.

Vacancies Rise as Rents Converge

The mismatch is becoming more visible as rents for 60% AMI units approach market-rate pricing. In Austin, more than 4,500 affordable units were vacant, producing a vacancy rate of nearly 16%, according to CoStar data cited by the AP. A healthy vacancy rate is around 5%.

LDG Development reported a 12% vacancy rate for its 60% AMI units in Austin and said it is competing directly with new market-rate apartments. The income-restricted properties also require more documentation and a slower approval process, making market-rate housing more attractive to some renters who can afford the slightly higher rent.

Portland shows a similar dynamic. More than 1,700 affordable units were vacant, while the overall affordable-housing vacancy rate stood at 7.5%, according to the Portland Housing Bureau. Most of those units served households at 60% AMI, with rents capped at $1,444, compared with an average $1,581 for a market-rate one-bedroom.

Why It Matters

For CRE owners and developers, the issue exposes a critical distinction within the affordable housing market. Building units for households at 50% or 60% of AMI does not necessarily solve the shortage facing households at 30% of AMI or below. In some markets, those higher-income affordable units can now compete directly with market-rate apartments while the deepest-income segment remains underserved.

The financing challenge is substantial. Developers say rents from extremely low-income tenants generally cannot cover construction, mortgage, and operating costs without significantly more subsidy. Housing vouchers can bridge some of that gap, but the AP cited estimates that only one in four eligible families receives one, and waitlists can stretch for years.

That leaves policymakers balancing two problems at once: vacant units that some eligible renters cannot or will not use, and an acute shortage of housing for households with the fewest resources. The disconnect could influence where future housing subsidies are directed and how programs measure whether affordable supply is actually reaching the households with the greatest need.

What’s Next

Austin offers a clear example of the imbalance. The city set a goal in 2018 to build 20,000 units for extremely low-income households by 2027. Only 543 had been built by 2024, according to city documents.

Meanwhile, all 15,000 units planned for households earning 60% to 80% of AMI had been built.

Austin’s housing department said it is responding. The city is giving preference to funding proposals that include 30% AMI units.

The broader challenge is funding. Developers need enough subsidy to make deeply affordable projects financially viable. Without it, new supply may continue to target higher-income households.

For CRE investors and developers, the gap offers an important distinction. Affordable housing demand cannot be measured only by unit counts. The depth of affordability also matters.