Philadelphia’s housing crisis extends far beyond the construction of new apartments. A less visible part of the problem lies within buildings that already exist and, after decades of operating under affordability requirements, are entering a new phase. A study released this week by the Pennsylvania Housing Finance Agency (PHFA) and the Housing Initiative at Penn puts numbers to that threat: 7,951 rental units across 135 Philadelphia properties could lose their affordability protections between 2027 and 2036.
That figure does not mean that nearly 8,000 homes will disappear or that their residents will necessarily have to leave in the coming years. What is at stake is whether the restrictions that require those properties to remain affordable will continue. That distinction matters. Once a property is no longer subject to those restrictions, its owner may pursue a new financing structure, sell or refinance the property, modify the development or, depending on the circumstances, raise rents toward market levels.
The issue takes on particular significance in Philadelphia because the city accounts for one of the largest concentrations of subsidized housing in Pennsylvania. According to the study, the state has more than 180,000 rental units across 2,885 developments receiving some form of federal support. More than 43,000 of those units could face the expiration of affordability restrictions over the next decade, representing roughly one-quarter of the state’s federally supported affordable rental housing inventory.
A Deadline Built Into the System
At the heart of the problem is the way the United States has financed housing for low- and moderate-income households for decades. Many developments were built or rehabilitated through the federal Low-Income Housing Tax Credit (LIHTC) program, administered by the Internal Revenue Service. In exchange for receiving tax incentives, property owners agree to keep designated units affordable for a specified period of time.
The system has helped finance and preserve a substantial amount of housing that might otherwise have been difficult to develop. But it also contains a built-in paradox: some of those affordability commitments have expiration dates. As those deadlines arrive, property owners must decide what comes next for their buildings. The Penn and PHFA study shows that those deadlines are now approaching in significant numbers.
Cypress Marrs, an associate researcher at the Housing Initiative at Penn, warned that these properties play an essential role in keeping people housed and that a significant loss of affordable units could have serious consequences. At the same time, Bryce Maretzki, PHFA’s director of policy and planning, said many owners are likely to renew or refinance their properties — precisely the outcome these programs are designed to encourage. The uncertainty lies in whether those preservation efforts will be enough to offset the number of units that ultimately leave the affordable housing inventory.
West and Southwest Philadelphia as a Test Case
The most immediate example can be found in West and Southwest Philadelphia. The Neighborhood Restorations portfolio includes roughly 925 affordable apartments spread across several neighborhoods and tied for decades to federal housing programs. Its owner, Jim Levin, has indicated that he intends to step away and sell the portfolio, while residents and community organizations have urged the city to prevent the properties from eventually becoming market-rate rentals. Roughly 3,000 people currently live in those buildings.
The situation has placed Mayor Cherelle Parker’s administration in the middle of a concrete test. In August, the city announced that it was working on a plan to help preserve nearly 1,000 affordable rentals within the portfolio. City officials have said that state and federal governments, along with other financial partners, will need to participate for a preservation deal to become viable.
The negotiations are not straightforward. Angela Brooks, the city’s housing and community development official, has said the administration is prepared to be part of the solution and that discussions have taken place with Levin, potential buyers and organizations such as the Local Initiatives Support Corporation. The Philadelphia Citizen also reported that the city is considering more than $30 million for preservation efforts involving the portfolio, although any transaction would depend on finding a buyer willing to maintain its affordable-housing mission.
The Real Challenge Begins After the First Solution
The Neighborhood Restorations case could ultimately become more than a dispute over a single real estate portfolio. In many ways, it offers an early look at a challenge Philadelphia will face on a much larger scale. If affordability restrictions on hundreds of properties expire over the next decade, the city will have to determine how much it can spend preserving existing affordable housing — and how much it must invest in building new units.
The Parker administration has already placed housing at the center of its policy agenda. Its H.O.M.E. initiative calls for the construction, preservation or rehabilitation of 30,000 homes and includes a proposed long-term investment of $2 billion. The city has also announced dedicated resources for preserving affordable housing.
But the Penn and PHFA study raises an uncomfortable question: Can Philadelphia preserve affordable housing at the same pace that other units are losing their affordability protections?
The answer remains unsettled. What is clear, however, is the timeline. Beginning in 2027, affordability restrictions will start reaching their expiration dates in growing numbers. For tenants, this is not an abstract debate about tax credits or financing structures. It can determine whether they are able to remain in their homes or face a housing market that, in some neighborhoods, may be considerably more expensive.
Philadelphia still has room to act. But the new report delivers a warning that will be difficult to ignore: preserving affordable housing may be far easier before it is lost than trying to recover it afterward.