Pricey Digs: HUD program averages $232,000 cost for each affordable housing unit it creates

Average per-unit costs were $232,000, most for one-bedroom apartments, in a review of a U.S. Department of Housing and Urban Development program designed to build and preserve affordable housing.

The Department of Housing and Urban Development's Housing Trust Fund program needs better oversight, according to a new report from the U.S. Government Accountability Office (GAO).

The report found that Housing Trust Fund grantees had developed 2,186 rental units (in 263 projects) for households with extremely low incomes (not exceeding 30% of the area median) as of March 1, 2022. Grantees had also committed Housing Trust Fund money to another 519 projects with an estimated 6,646 units designated for extremely low-income households.

The report also looked at the pace of completion.

"Once grantees began receiving [Housing Trust Fund] funds in late 2016, production of completed units averaged about seven units per quarter from the fourth quarter of 2017 through 2018, but grew to almost 300 units per quarter in 2021," according to the report.

For the 12 selected grantees the report reviewed, Housing Trust Fund accounted for about 10% of the total funds for 70 completed projects. Equity from investors in Low-Income Housing Tax Credits was the largest funding source, according to the report.

"The average development cost for these 70 projects was about $232,000 per unit but varied by project type and location," according to a summary of the report.

About 41% of the units created through the program were one-bedroom units, according to the report. Another 16% were smaller efficiency units with a single room.

In June, the median existing-home sale price was $410,200 in the U.S., according to the National Association of Realtors.

GAO recommended ways to improve oversight of the Housing Trust Fund program.