economy
Why this corner of the muni market shouldn't be overlooked, according to Nuveen
The concerns around housing affordability make this a good time time to consider buying housing muni bonds, according to Nuveen.
TL;DR
- Housing affordability is a major issue, making housing muni bonds an attractive investment.
- Income from housing muni bonds is exempt from federal taxes, and state taxes if the investor resides in the issuing state.
- Increased demand for affordable housing has led to a tripling of annual housing bond issuance between 2016 and 2025.
- Housing bonds now represent about 7% of the $4.4 trillion muni market.
- Nuveen's analysis shows housing bonds offer approximately 60 extra basis points in yield for 10-year maturities compared to other muni bonds.
- Types of housing bonds include single family, multi-family, and workforce housing.
- Single family bonds, often issued for first-time homeowners, are highly rated.
- Workforce housing bonds target essential workers struggling with market-rate housing costs and fall into the high-yield space with more risk.
- Investing in housing bonds allows for social good by providing cheaper capital for developers, which is passed on to renters and homebuyers.