Low-Income Housing: Another Crisis Looming?

Some owners still believe they can profit by remaining in the subsidized housing game. Mark Carbone is the head of the division of New York-based Related Properties that deals with affordable housing. He says his company is well-financed enough to weather the current housing bust and continue to offer low-cost dwellings. "When we've had the opportunity to opt out, we've chosen to stay in," says Carbone, whose company has holdings in several states. "It doesn't mean we've forfeited a great deal of profit." He says with a strong cash flow, there is no need for Related to go out and raise money the way smaller firms might.

Yet if enough landlords opt out, the challenges will be forbidding — and not just for the poor renters who will need government help to find places to live. Building owners hope to attract wealthier tenants to fill the vacancies. But there just might not be enough of these to go around. Says Howard Husock, vice president of policy research at the Manhattan Institute, a conservative New York-based think tank: "If you look at the location of many of the buildings that are discussed, there is not an unlimited supply of investment bankers who are going to move into lower-income areas. That's why the government must figure out how they will help these buildings."