Area Median Income is getting out of hand in Wilmington. Where a person making 30% of the AMI in 2015 would have earned just $13,300 a year, now that number is $22,750. That's a 71% increase in a decade. Consumer inflation went up just 35% in that time.
That AMI increase is tied directly to rising rents — not just as a result of market forces in market-rate rental housing, but also in government-subsidized affordable housing, which is often produced through the Low Income Housing Tax Credit program (LIHTC).
It means tenants in traditional public housing can make more without hitting the benefits cliff, but a tenant moving into LIHTC housing will be charged a much higher rent than they would have experienced in 2011 — an 80% increase that beats the 44% inflation the country experienced during the same time frame.
Residents have noted the change and are starting to wonder how this affordable housing has become so unaffordable.
One resident spoke out against a LIHTC development at 2929 Market Street at a Wilmington city council hearing last September, saying, "I don't know about you guys, but this affordable housing is more than my mortgage, and so therefore, I don't know how that really works.”
She was talking about a project expecting to charge $525 on the low end (a 1-bedroom at 30% AMI) and $1700 on the high end (a 3-bedroom at 80% AMI). Many other attendees of that meeting exclaimed in shock at the $1700 figure, saying it couldn't possibly be affordable.
That's a common refrain, according to advocates.
Housing advocate Liz Carbone said, "On the one hand, AMI percentages are a really helpful tool to make sure that we're hitting a diverse range of incomes when we're talking about delivered housing products. In a lot of ways, it's the best data point that we have."
But because Wilmington's demographics are changing as higher-income people move here, Carbone said.
"That is just another way of putting pressure on people who have won the lottery, so to speak, and gotten into a subsidized unit, whether that's a Low Income Housing Tax Credit unit or other opportunity. You know that is still a rising rent number for them, year over year, as AMI has increased so drastically," she said.
The rising median income in the Wilmington area may seem like a good sign for locals, but looking at more granular data paints a different picture.
"It's really easy to see year-over-year increases to the Wilmington area's AMI and say, 'Wow, wages are going up, and as a community, we're really thriving. Isn't this great?'" Carbone said. "But when you marry that with the inbound and outbound migration data, you see a very different story, and that is that higher wealth people and higher earners are moving into this community, and lower-wealth folks or lower-income earners are being pushed out."
And that shift is also driving up housing costs even for the subsidized units, since they are based on AMI. The ratcheting effect makes it harder to be a low-wage worker in Wilmington while managing to stay in the area — either in market-rate units, or in LIHTC.
For instance — a rental aimed at families making 50% of AMI in 2020 cost $1020. In 2025, that's risen to $1408. It's more affordable than the market average for that size of unit, which is $1900, but it's still a substantial and challenging increase.
It's a quirk of the LIHTC program, which is how 90% of affordable, subsidized units are created in the United States.
According to Carbone, "it's a critical pillar of how you create a healthy housing ecosystem, but it can't be the only tool that we rely on to ensure that folks have an affordable place to rent, because, by definition, by leaning on the private market to help us solve this piece of the puzzle, that is not going to work for every person, especially as area median incomes continue to rise."
Origin of LIHTC
LIHTC has other quirks, though. The program came out of the Reagan administration's efforts to reform the tax code with the Tax Reform Act of 1986. It took a lot of funding for traditional public housing off the table, and started allowing corporations to seek tax breaks in exchange for funding affordable housing development. Those tax credits are given to developers, but they don't quite cover the full cost of development, which means they often need to turn to local governments and other agencies for gap financing to cover the rest.
There are benefits that come along with it being designed this way — the tax code doesn't get major overhauls very frequently, so the funding stream is far less likely to be interrupted compared to an annual appropriation (which cut, or delayed by a policy shift or government shutdown). The tax credit system actually got extra funding thanks to the Trump Administration's One Big Beautiful Bill Act last year.
Carbone said there are benefits to it being outside the direct management of government.
"It harnesses that economy of scale that the private market brings to the table. You know, the ability to leverage capital to pull off large-scale construction projects," she explained. "That is not a skill or a capacity that locally-based nonprofits can just pull out of a hat and come up with 200-300 units of affordable housing in a few years."
LIHTC comes with specific strings attached — rents are capped based on AMI, there are caps on how much rent can go up each year, and tenants can't stay if they end up earning more than the cap.
The LIHTC program is also built with an affordability end date for each property — the newly built affordable units have an "affordability period," usually of 30 years (although the IRS can only claw back the credits for the first 15 years, which limits the enforceability of the regulations).
After that point, the property can switch to market rate — though the length of that affordability period is aimed at having the properties naturally fall into "naturally occurring affordable housing" in that time.
Those are the properties that are lower-end, due to age or deterioration, that are more affordable than grade-A properties that were more recently constructed.
"In a world of five-alarm fires right now is the expiration of tax credit properties, like from the building waves of the 90s and early 2000s. We're coming up on those tax credit expiration dates," Carbone said.
Some of the owners of those properties may turn them into market-rate properties, especially since the market is so hot in the Wilmington metro area.
But to Carbone, that just means future LIHTC credits should go to specific builders — builders who will reapply for LIHTC to extend the life of their affordable buildings — and the affordability periods.
"We also need to think about how tax credits are allocated, to make sure that rehabilitation happens and that the affordability periods are extended," she said.
In North Carolina, Carbone says thousandsof these LIHTC units will see the end of their affordability periods in the next five years. In New Hanover County, there are 779 units facing the sunset of their affordability period before the end of 2030.
