THE BLOG

Affordable housing has been a hot topic over the past few years; With an increasingly expensive rental market not only hitting metropolitan areas, but small towns too, largely in part to the pandemic. As property values rise in areas seeing an influx in new city dwellers, cities are confronted with the dilemma of housing scarcity. One short answer to this is capitalizing on public/private funding and siphoning off allotted dollars to private developers to then develop the housing needed. Now, there are a myriad of challenges when it comes to each phase of developing affordable housing, but one of which is the concern of the citizens (mainly local home and business owners).

The NIMBY (not in my backyard) communities are typically a small percentage of an area, but carry quite a lot of power as they are generally afforded privileges those on the “other side” don’t have. Rightfully, these individuals have a stake in the community and are able to express their concerns. However, the concerns addressed regarding affordable housing development are arguments that create a stigma around an entire subset of the population. It’s important to fact-check what’s being perpetuated in cities regarding affordable housing developments because NIMBYs have the ability to block a development project. And the more well-informed citizens there are, hopefully the less likely such a thing can occur. 

Let’s break down some of these falsities…

“Affordable housing will decrease the property value in the area it’s built in.”

Reality: More times than not, the property value will not decrease. Research has been done across the US, comparing the property value of the surrounding areas near the development and the citywide price changes of comparable properties further away over time. The findings showed a causal relationship with increased property values in the surrounding neighborhoods (Understand the Spillover Effects of Subsidized Rental Housing). Funding from Low-Income Housing Tax Credits (LIHTC) (the largest affordable housing financing program in the US) have resulted in an immediate increase of 3.8% in nearby property values (Urban Institute).

It is important to note the biggest spillover effects occur in lower-income neighborhoods, with projects rehabilitating blighted properties. Given the zoning requirements and cost of land, developments are typically not going to be taking place in high-income areas. In the rare cases they are, there have been decreases in home prices, but such a sentiment goes back to the complex relationship people have with systemic racism and classism. A way to remedy people in higher-income areas accepting affordable housing development is through design standards, such as the 100 unit workforce and supportive housing development being done by Daylight Community Development in Woodland Hills (with an AMI of $107,623 per year). When the social good of a project isn’t convincing enough, providing quality design that blends into the context of the area becomes increasingly important. 

“Affordable housing will increase the crime-rate of the area it’s built in.”

Reality: This statement is false, and is a cause from the stigma of desperation surrounding low-income individuals. A study of LIHTC properties done in 2016 found that affordable housing developments actually decreased crime rates in the areas where development occured(Urban Institute). This can be explained by an increase in opportunity and decrease in desperation. Affordable housing development has to meet standards of being placed in high resource areas,

(close proximity to an open space, a grocery store, medical care, public transportation etc.); Thus when an individual can have their basic needs met through housing and local resources, they can focus on earning a living and will be less likely to resort to crime as a means of “getting by.” The University of Irvine studied affordable housing’s causal relation to property value and crime rate in Orange County, and found that Irvine (with the most affordable housing units in the county) is the safest in the nation (UCI). Granted, there are other factors that go into Irvine being safe, but adding affordable housing does not negatively affect the crime rate.

“Affordable housing will cause blight to the area it’s built in.“

Reality: An affordable housing development can replace abandoned, boarded-up buildings, or vacant lots (places that are recognized as disorganized and susceptible to criminal activity). This will mean the development or rehabilitation of the area will remove the threat and create a positive effect on the environment. But, a negative effect can be created if the development is removing a desirable use, such as a park or historic building.

A community in Memphis, Tennessee had a mix of blighted and healthy properties, after investing to renovate 18 homes with $1 million, the neighborhood grew to prosper. The neighborhood gained $6 million in real estate value, creating an increase of $112,000 in annual tax revenue (HUD). It’s important to not turn a blind eye to neighborhoods that could head into greater disrepair or could have the potential to be restored. New development is also a signal to investors of potential value to be capitalized on; Which is a fine line to follow in mitigating the potential of gentrification. 

“Affordable housing is just another ‘government hand-out.‘”

Reality: Affluent homeowners benefit the most from federal housing subsidies. The mortgage interest deduction (MID) allows a homeowner to reduce their taxable income by the amount they paid in mortgage interest for the year. As of 2018, MID cost the government more than five times the “cost” of LIHTC for the next five years ($216.6 billion versus $46.9 billion) (Novogradac).

While 64% of Americans are homeowners (2018), almost 85% of housing subsidies go to this population. And within this population, the median income is $88,000 versus the median income for a renter is $41,000 – meaning a disproportionate rate of housing subsidies are going to the group that makes more than double the other. There should still be incentives for homeownership, however there needs to be equity in money allocated for housing and a better understanding that the government “hands out” money to varying income levels.