For years, a common and strong objection to affordable housing development has been that it lowers the real estate value of homes in the surrounding areas. That, it turns out, is a myth. A recent report published contradicts the age-old “Not in my backyard!” argument. The report tracked housing prices and affordable projects developed during a 10-year span in the 20 most expensive U.S. metro areas—cities in dire need of affordable housing—and found no significant effect on nearby home values.
The report looked at 3,080 projects financed through the federal Low-Income Housing Tax Credit (LIHTC) program between 1996 and 2006 and compared the values of buildings located within 2,000 feet of the projects with a control group located further away at 2,000 to 4,000 feet. The property values of the first group were nearly identical to those in the second group, showing that proximity to affordable projects did not have a negative impact on real estate values.
Still, property values do not exist on their own. They are a product of perception. It is extremely difficult to persuade homeowners to let go of a deep-seated belief that affordable housing will ruin their neighborhoods by lowering real estate values and by attracting the “wrong kind” of people who will damage property and drive crime rates up. They fear the worst, but their fears are unfounded.
A literature review of quantitative studies conducted by University of North Carolina’s Department of City and Regional planning showed that affordable housing’s impact on property values is less significant than other variables and that its influence grows when projects are clustered.
A 2015 study by the Stanford Graduate School of Business revealed that affordable housing development could be an effective policy to help revitalize and integrate low-income areas. After pulling data on 16 million transactions from 15 states, as well as homebuyer race and income information over a 10-year span, they found that new LIHTC projects in poorer neighborhoods increased surrounding home prices and reduced crime.
A 2014 report on the relationship between affordable housing and home values prepared by Maxfield Research for the Family Housing Fund in Minneapolis showed little or no evidence to support the claim that affordable or low-income rental housing has a negative impact on owner-occupied housing in the surrounding area.
A 2012 study conducted for the Delaware Housing Coalition concluded that proximity to a project did not affect home values. According to the study, which analyzed data on home sales between 1970 and 2011, any correlation between lower property values and the presence of affordable housing was due to projects being built in areas where the property values were declining or already low.
Negative attitudes about affordable housing are deeply ingrained in our society. The “not in my backyard” way of thinking will continue to linger until enough people are convinced—through educational initiatives by local governments, housing advocates and real estate associations—that affordable housing helps build, not destroy, communities.