Producing affordable housing in higher-opportunity neighborhoods: Incentives in California’s LIHTC program
December 19, 2023 by Housing policies, particularly through the Low-Income Housing Tax Credit (LIHTC) program, can significantly impact access to high-opportunity neighborhoods for low-income children. The LIHTC program aims to reduce neighborhood inequality by fostering community development in distressed areas and creating affordable housing in high-resource areas. California’s recent QAP regulations have successfully incentivized the construction of large family developments in higher-resource areas, increasing the probability of such projects by 50%. Despite these gains, barriers like restrictive zoning and funding limitations remain, and less than one-third of large family projects are still located in higher-resource areas. Moreover, the overall impact on broader segregation patterns is modest, given the small share of subsidized housing in the U.S. While LIHTC is a crucial tool for affordable housing, balancing cost and resource allocation remains a challenge. Further research is needed to evaluate tenant mobility, accurately measure neighborhood opportunity, and develop cross-state models to maximize the program’s effectiveness in reducing residential inequality and promoting children’s well-being.