U.S. demand for rental housing is overwhelming. Analysts now project that developers will need to build at least 3 million new apartment units over the next 10 years to satisfy the demand of this growing housing segment. Alarmingly, the fastest growing subset of renter households in the U.S. are known by HUD as “Worst-case housing needs:” renters who do not receive assistance and earn less than 50% AMI. Since 2007 this group has had a staggering 43.5% increase and now represents 20% of the total number of renter households throughout the United States.

Attempts to satisfy this demand requires new construction and also extensive preservation of existing affordable units through the redevelopment process. To help make this possible, the Bipartisan Policy Center’s recent report, “Housing America’s Future: New Directions for National Policy,” has identified a number of improvements to U.S. Housing Policy. Of particular interest is the recommendation to increase the annual LIHTC allocation by 50%. The report also suggests allocating this increase in a more targeted manner; based on a formula that measures a State’s share of cost-burdened renters or on the size of the State’s total renter population.

Expanding LIHTC in such a targeted fashion is a critical step in addressing the serious shortfall in the supply of affordable housing. After all, since current federal housing assistance helps only 25% of those eligible due to high demand and constricted supply, smart improvement to an already successful program are a welcome addition to the market.