Does Affordable Housing Cause Nearby Property Values to Decline?
It’s a common scene at a community hearing: local residents lined up behind the microphone waiting to testify about a proposed affordable rental housing development. Some are voicing concerns that the development will decrease property values in their neighborhood. Their concerns are understandable – they want to protect their investment in their homes. On the other side, housing advocates and prospective residents argue with equal passion. They want to live in affordable homes with access to jobs, schools, and other amenities for themselves and their children. Affordable housing, they argue, will not affect the home values of residents already in the community.
Which side is right? This policy brief summarizes the conclusions of several reviews and critiques of the growing body of research on this topic. It also highlights some of the most recent work in this area carried out by researchers at the Furman Center of New York University and funded by the John D. and Catherine T. MacArthur Foundation.
But the short answer is: Quality affordable housing generally has a neutral or positive effect on nearby property values.
Decent, affordable housing fulfills a basic human need for shelter. Children in stable housing do better in school and have fewer behavior problems. Adults have fewer stress-related health problems. We all benefit when our community members are healthier.
By providing affordable housing, income that would have been spent on housing is freed up to be spent on goods and services, boosting the local economy.
Increasing the supply of housing to meet surging demand helps prevent inflationary bubbles in rent and real estate prices. This reduces foreclosures and evictions.
Projects done in partnership with the city have rigorous standards for design, construction, management, and maintenance. Numerous studies have shown that affordable housing generally has a neutral or positive effect on surrounding property values.
Affordable housing is sometimes called “workforce housing” because many of those housed are essential workers: teacher’s aides, nursing assistants, retail clerks, construction workers, and more. Everyone benefits when essential workers have places to live.
Affordable homes can attract and retain employees to a community, which is a competitive advantage for area employers.
When affordable housing is built in blighted areas or as infill development, it can revitalize struggling communities. Quality affordable housing is preferable to vacant lots or dilapidated buildings.
When affordable housing is built near employment centers, it allows workers to live close to their jobs. Shorter commutes reduce traffic congestion, air pollution, and wear and tear on roads.
Affordable housing brings state, federal, and private investment to the community. While developers get breaks on impact fees, those incentives are a small fraction of the millions of dollars poured into the community during construction and later in property taxes.
Construction of affordable housing typically goes hand-in-hand with upgrades to water and sewer lines, electricity capacity, roads, and mass transit. It spurs investment in infrastructure.