Investors return to affordable housing

How housing finance agencies are incentivizing in the face of a weak bond market

What got me interested in the state of state housing finance agencies (SHFAs) was a small news story at the start of the year about Fitch Ratings issuing a statistical report for the tax-exempt housing sector. The one sentence that caught my eye read: "In comparing fiscal 2011 results with those from fiscal 2010 for the 34 SHFAs, Fitch found that total assets decreased by 5.4 percent, while total debt decreased by 7.5 percent, reflective of the overall decline in bond issuance." While the sentence seems straightforward, I was confused because I wasn't sure if the decline in total assets and debt was a good thing or a bad thing. I decided to call Barbara Thompson, the executive director of the National Council of State Housing Agencies (NCSHA), to get her take on the Fitch Report. "We don't want to see assets decline," Thompson said, "but the reason is just as Fitch put it: The overall market (for housing bonds) is bad in terms of activity." To ...