Affordable housing is a pressing issue nationwide, and Pittsburgh is no exception. With rising rents and home prices outpacing incomes, more Americans are finding it harder to make ends meet.
According to U.S. Census data analyzed by Harvard University, one in three U.S. households—whether renting or owning—spend more than the recommended 30% of their income on housing and utilities, making them “cost-burdened.”
At ELDI, we believe that a thriving, equitable neighborhood is a mixed-income neighborhood, and a key part of fostering a mixed-income neighborhood is creating and preserving affordable housing. Today, approximately 38% of rental units in East Liberty are long-term affordable. With the rental market stable, in recent years, our focus has been not only on maintaining these units but also expanding affordable—and attainable—homeownership opportunities for low- and moderate-income (LMI) families.
By “affordable,” we mean homes affordable to individuals earning 80% or less of the Area Median Income (AMI), while the term “attainable” covers individuals who earn up to 120% AMI.
In this article, we will take a closer look at what it takes to fund affordable and attainable for-sale housing, including the funding sources available and what is needed to scale affordable housing production across the city.
Understanding the scale of the challenge
Despite growing awareness around the need for affordable homes, far less attention is paid to the financial realities of making it happen. According to the City of Pittsburgh’s Housing Needs Assessments (2016 and 2022), there is a shortfall of around 5,000 homeownership units for households earning at or below 100% AMI.
To meet this demand, the City must produce roughly 250 new affordable homes per year over the next 20 years. The land is there—Pittsburgh has nearly 24,000 vacant properties, including 12,000 to 15,000 vacant residential lots and structures, as reported by Pittsburgh Quarterly. What the City lacks is sufficient capital.
Main + Elm Development Company, a recent spin-off and key partner of ELDI, estimates that each affordable or attainable unit will require $200,000 to $300,000 in subsidy to build, amounting to $1.25 billion over two decades.
Behind every affordable home is a complex funding puzzle
So the question is: where will this money come from?
“It used to be that URA funding could often close the gap,” says Shivam Mathur, Senior Project Manager at Main + Elm. “Today, that’s rarely the case. Even the smallest projects require a blend of multiple funding sources.”
Currently, four primary sources are typically used to finance affordable and attainable homes:
- The Urban Redevelopment Authority Pittsburgh (URA) – Pittsburgh’s URA provides grants, loans, and financial support for community development and affordable housing projects. While essential, URA funding alone no longer closes most financing gaps.
- Federal Home Loan Bank (FHLB) – Through its Affordable Housing Program, FHLB provides targeted grants to help finance the purchase, construction, or rehabilitation of housing for LMI families.
- Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund (PHARE) – A flexible state resource administered by PHFA that supports a range of affordable housing activities, from new construction to critical home repairs.
- New Markets Tax Credits (NMTC) – A federal tool designed to attract private investment in distressed communities. ELDI and its partners have successfully used NMTCs to generate equity from market-rate units and redirect it toward subsidizing affordable homes.
Mathur points out that the fundraising and predevelopment process can easily take 12 to 24 months before construction even begins.
“This behind-the-scenes work is what most people don’t appreciate when they call for more affordable housing,” Mathur noted.
Take, for example, a four-unit project Main + Elm is working on in Larimer. They are drawing $600,000 in funding from FHLB, $120,000 in PHARE funds, and $360,000 from the URA to support a $1.7 million total rehab. Two of the units are fully renovated while the remaining two are under construction. From start to finish, Mathur estimates that the project will take 2.5 years. While this was a little longer than usual due to the nature of these conservatorship cases, it is not uncommon for timelines like this to occur with affordable developments.
Doing more with less: innovative financial tools
Given these funding constraints, developers of affordable housing have to do more than just build homes; they also must engineer complex capital stacks.
Nowhere is this creativity on better display than in our project on North Saint Clair Street, where the sale of two design-forward, market-rate homes helped subsidize affordable units elsewhere in the neighborhood.
This subsidization approach was first pioneered by Smith NMTC Associates. They developed a for-sale housing model that helps nonprofits use NMTCs to offset losses on affordable home sales. NMTC equity is used to close funding gaps, demonstrating how market-rate and mission-driven goals can coexist in a single development.
“With NMTCs, we can accelerate and increase the growth of affordable homes for LMI buyers. Developers, most often nonprofits, can scale up their development projects to more quickly address the dearth of homes available,” said Howard Smith, co-founder of Smith NMTC Associates.
Scaling up this work matters for more than just housing families.
Why this work matters
“The homes we build aren’t just places to live—they’re instruments for lasting change,” explained Jonathan Huck, Executive Director of Main + Elm.
Creating more affordable and attainable for-sale housing has far-reaching implications, not just for keeping families in their neighborhoods, but also for generating and diversifying equity, leveraging existing infrastructure and investments, encouraging and expanding investments, bridging the racial wealth gap, and undoing legacies of exclusion.
It’s also essential to stabilize neighborhoods, as affordable homeownership increases community stability, boosts local tax revenue, and supports neighborhood schools and services.
Looking ahead: scaling what works
As funding affordable and attainable homeownership units becomes both more challenging and more urgent, we are pushing forward a more inclusive and proactive form of community development at ELDI. It’s the model we used to revitalize East Liberty—where nonprofits and community development corporations take on more responsibility—not only convening neighbors to define a vision for a neighborhood but also helping communities acquire the land and find the funding to make those visions a reality.
This work is made possible through strong partnerships. ELDI works closely with Main + Elm, Catapult Greater Pittsburgh, and Rising Tide Partners to coordinate every phase of the process—from acquiring vacant property and engaging with community members to build their visions (Rising Tide) to preparing community members to become homeowners and active stewards of their communities (Catapult Greater Pittsburgh) to facilitating the real estate development process (Main + Elm). Each organization brings a unique focus, creating an ecosystem equipped to tackle Pittsburgh’s housing challenges holistically.
We’re also watching key federal policy developments, most notably the Neighborhood Homes Investment Act (NHIA). Often referred to as a “Low Income Housing Tax Credit for homeownership,” NHIA would offer tax credits for the construction and rehabilitation of homes in disinvested communities, making them affordable to moderate-income buyers. Experts estimate the program could create half a million homes over the next decade while strengthening local tax bases and revitalizing communities.
Rethinking what it takes
Affordable and attainable for-sale housing isn’t just a construction issue—it’s a financial, political, and logistical challenge. At ELDI, we’re committed to doing the behind-the-scenes work it takes to get projects over the finish line. If Pittsburgh is serious about meeting its housing needs, we must continue to back bold, creative, and scalable approaches to making homeownership a reality for more of our neighbors.