An official website of the Aging housing infrastructure
The deficit of affordable housing needed in the region requires the preservation of existing housing stock. Preservation of housing, especially affordable housing, can mean both physical upgrades and maintenance of housing, as well as the preservation of affordability commitments or lower-cost housing options. Affordable housing includes directly subsidized affordable housing units and unsubsidized affordably priced housing units, not directly supported by local, state, or federal funding and often referred to as Naturally Occurring Affordable Housing (NOAH). Preservation of affordability often means securing or extending long-term commitments to participate in an affordability program (for example, Low Income Housing Tax Credits).
What is unsubsidized affordable housing?
Housing that receives funding from federal, state, or local government programs that reduce the cost of housing for low-and moderate-income residents is considered subsidized housing. Housing may be subsidized in many ways, including tenant rent vouchers, downpayment assistance for homebuyers, reducing interest on a mortgage, financial support to reduce operating costs, and providing tax credits to encourage investment in low- and moderate-income housing.
Housing that does not receive government program funding is considered unsubsidized housing. Specifically, unsubsidized affordable housing often has rents lower than market rates and affordable to low- to moderate-income households. This unsubsidized affordable housing is often referred to as NOAH (Naturally Occurring Affordable Housing) and is the most common form of affordable housing in the region. Over 70% of housing units that are affordable to households earning less than 60% AMI are unsubsidized NOAH units.
Most existing housing affordable at/below 60% of area median income is unsubsidized
Source: Metropolitan Council analysis of existing housing units using for the 7-county region CoStar commercial property data (only multifamily properties with five or more units are included) and HousingLink STREAMS data, 2018 - 2022. Directly subsidized refers to publicly funded rental housing and rental units with direct subsidy from federal, state, or local level sources that require long-term rent restriction.
The role of unsubsidized affordable units within the rental housing market is important to consider in parallel to the development of new affordable housing units considering the small share of new development that is affordable. Only 11% of newly constructed units in the seven-county region are affordable to low-income renter households.43 Additionally, the majority of all affordable housing units, 70%, are older housing units that are privately-owned and unsubsidized, making unsubsidized affordable housing the largest supply of housing for low-income renters.44 Considering the large need for affordable housing, preservation of unsubsidized affordable units can help meet ongoing needs for affordable housing in the region, especially as federal, regional, and local housing subsidies and grants to build new affordable units are becoming increasingly competitive.
Affordable housing is not always maintained to a safe standard or required to remain affordable over time. In our engagements with residents in the region, some residents referred to their unsubsidized affordable housing units as feeling unsafe or becoming increasingly more expensive.45
"As I lived in an apartment for nearly 9 years after I first came to the U.S., this place was unsafe in terms of the living condition and unsafe in terms of violence. I only lived there because it was more affordable for my family."
Quote footnote: 46
Overall, the regional housing stock is in good condition compared to many of our peer regions, yet housing with delayed necessary maintenance and repairs and decades-long disinvestment still exists. Policies and programs are needed at the regional and local level to support and prioritize preservation, improvement, and modernization of our aging housing infrastructure. As of 2022, half of all housing units were built before 1980.47 Many of these properties are facing substantial maintenance needs for major systems such as roofing, windows, mechanical, and plumbing in addition to routine maintenance and upkeep which can be prohibitively expensive. Many property owners of rental housing lack the full amount of financial capital to keep these properties affordable without falling into disrepair. These unsafe units either remain on the rental market as is or are sold to investors who update the properties and put them back on the market at high rents. When these unsubsidized affordable units are lost, through sale, renovation, and/or conversion to market rate or luxury apartments, tenants can be displaced.
Preserving these units from potential loss is imperative to mitigating displacement in the region. Any loss of affordable units in the market offsets the already lagging production of new affordable housing, increasing the challenges of locating stable, affordable housing for any displaced tenants. In recent years, local governments and housing agencies have grappled with addressing deferred maintenance and safety of buildings, putting greater focus on improving tenant rights, rewriting crime-free ordinances, and seeking desperately needed funds from the state legislature.
Despite a coordinated and strong effort at the regional and state level to prevent the loss of more affordable housing, the region is at risk of losing affordable units as their commitments expire. Throughout the region, many long-time subsidized affordable housing properties are reaching the expiration of their required affordability term. Due to the high cost of deferred and routine maintenance, maintaining affordability beyond the initial commitment period is often challenging, and some affordable housing property owners decide to sell to the open market or to let a subsidy contract expire rather than face the costs of maintaining affordability. This can lead to displacement of residents and intensify the need for affordable units by decreasing the number of affordable units available on the market.
Preservation and maintenance of existing housing stock can combat the growing deficit of new affordable units for cities and townships, while providing housing choices closer to jobs and community amenities. This provides opportunities for residents to remain in the neighborhoods in which they already reside and feel connected to, as well as opportunities to move into housing that is appropriate to their needs and preferences.
43. Metropolitan Council Affordable Housing Production Dataset, 2018-2022, 7-county region permitted housing units.
44. Metropolitan Council NOAH research using CoStar and HousingLink STREAMS data for the 7-county region. 2022.
45. Metropolitan Council. (2024). 2050 housing policy plan community exchange sessions report & affordability limits survey results. https://metrocouncil.org/Housing/Planning/2050-Housing-Policy-Plan/HPP-2050-Engagement.aspx
46. Metropolitan Council. (2024.) Quote from an engagement participant of the World Youth Connect Young Leaders Collaboration, 2023. https://metrocouncil.org/Housing/Planning/2050-Housing-Policy-Plan/HPP-2050-Engagement.aspx
47. U.S. Census Bureau, American Community Survey (ACS). 15-County MSA. 2022 ACS 5-Year Estimates. Data summarize tenure of occupied housing units.
