"With the whole housing market in a deep freeze, it's perhaps not surprising that fewer low-income units – which require huge subsidies to get built even in flush times – are being constructed. But the slowdown is happening at a time when rising foreclosures are forcing more people into the rental market.
The problem stems from the fact that the primary mechanism for expanding housing for the poor – tax credits – has collapsed. These credits, though little known, are responsible for financing as much as 70 percent of the cost of constructing new low-income housing.
The stimulus bill being debated this week in the US Senate does just that. So far, it would grant $2 billion to be distributed to individual states to fill affordable-housing financing gaps. Under the House version of the bill, the US government would buy a portion of credits that developers couldn't sell, in the hope that would be enough to get construction moving again."