IRS Data Shows Tax-Exempt Housing Bonds Rebounding

Published by Michael Novogradac on Wednesday, December 11, 2013 - 12:00am

In late October, the Internal Revenue Service (IRS) released the annual update to its Tax Exempt Bond (TEB) Statistics. This rich dataset includes details about tax-exempt qualified residential rental bonds used to finance affordable rental housing. Digging into the data reveals a few interesting points.

One interesting point is just how deeply affected the tax-exempt bond market was by the Great Recession.  From 2002 to 2007, an average of $8.75 billion worth of tax-exempt residential rental housing bonds were issued each year, with no one year dipping below $7.56 billion. The Great Recession low was hit in 2009, with a mere $3.83 billion in rental housing bonds issues.  The good news for those in need of affordable housing is the market rebounded in 2010 and continued to rise in 2011.  IRS’ most recent data is from 2011, and shows that $6.55 billion worth of tax-exempt residential rental housing bonds were issued that year, an increase of 71% from the low of 2009.

What about 2012? While the IRS has not yet released data for 2012, we can use California, one of the nation’s largest housing markets, as a bellwether. The California Debt Limit Allocation Committee reported that in 2012, they allocated $1.25 billion worth of tax-exempt residential rental housing bonds, which was the same as the year prior. Texas, another of nation’s second largest housing market, on the other hand, increased its allocation by $216,730,000, or 147.86%!

To discuss the latest tax-exempt rental housing bond market trends and what’s in store for the debt market, I encourage you to join other affordable rental housing stakeholders at the Novogradac Tax Credit Housing Developers Conference Jan. 9-10 in Miami.