Affordable Housing's Effect on Property Values

The Bottom Line

To summarize, affordable housing's effect on surrounding property values is minimal. The effect can be positive or negative and it depends on various other factors that impact property values. 

• Affordable housing can increase, decrease, or have no effect on surrounding property values, depending on particular circumstances.
• Affordable housing's negative effects on property values are usually minimal compared to other factors that impact property values (location, property condition, neighborhood condition, local economy, etc.) (Nguyen).​
• ​When the design of affordable housing isn't compatible with the host neighborhood or when developments aren't maintained, nearby property values might drop (Nguyen). ​
• Negative effects on property values likely occur when affordable housing is clustered and located in disadvantaged and declining neighborhoods (Nguyen).​

What Research Suggests

A-Mark Foundation. (2023). What is the impact of low-income housing on property values?. A-Mark Foundation. https://amarkfoundation.org/reports/what-is-the-impact-of-low-income-housing-on-property-values/  

• When affordable housing is built in neighborhoods with primarily low-income residents, property values could increase. However, when affordable housing is built in more affluent neighborhoods, property values could decrease. 
• A 2022 study found that properties built under the low-income housing tax credit (LIHTC) scheme in Illinois generated "positive price spillover effects on the surrounding neighborhoods.” LIHTC housing developments positively impacted both lower-income and higher-income areas, with authors stating that “more development is not worse and often may be better – at least for local property values.” 

• A 2007 study found that property values increased when LIHTC housing was built in declining areas in California, Illinois, New Jersey and Texas. 

Albright, L., Derickson, E. S., & Massey, D.S. (2013). Do affordable housing projects harm suburban communities? Crime, property values, and taxes in Mount Laurel, NJ. City Community, 12 (2), 89–112. doi:10.1111/cico.12015 

• In Yonkers, studies found that despite substantial racial and socio-economic differences between subsidized housing residents and neighboring residents, there was no change in property values.  
• Factors that influence positive impacts on property values include:
  • density between LIHTC sites,
  • architectural consistency with surrounding neighborhoods,
  • careful attention to landscaping and aesthetics,​
  • close collaboration with municipal officials. 
• Research shows that the introduction of affordable housing typically follows property value trends that already exist in neighborhoods:
  • Introducing affordable housing to neighborhoods with already declining property values likely contribute to further declines,
  • Areas with appreciating property values continue to appreciate after developing and opening affordable housing in neighborhoods. 

Diamond, R, & McQuade. (2016). Who wants affordable housing in their backyard? An equilibrium analysis of low income property development. NBER Working Paper Series, Working Paper 22204 http://www.nber.org/papers/w22204  

• In lower income neighborhoods, property values significantly appreciate over time after affordable housing developments are introduced.
• Neighborhoods with high minority populations experience significant property value increases when LIHTC developments are built.
• Property values in areas with higher incomes and lower minority populations can depreciate over time.

Goetz, E. G., Lam, H. K., & Heitlinger, A. (1996). There goes the neighborhood? The impact of subsidized multi-family housing on urban neighborhoods. Center for Urban and Regional Affairs and Neighborhood Planning for Community Revitalization.  

• We found that nonprofit-developed subsidized housing has a small positive impact on property values, while public housing and privately owned, publicly subsidized housing have fairly minor negative impacts.
• The quality of private ownership in the neighborhood is a major determining factor for residential property values:
  • housing stock quality,
  • the presence of abandoned properties,
  • lack of adequate maintenance by private owners.

Hipp, J., Iliff, C., Owens, E., Tita, G., & Williams, S. (2022). The impact of affordable housing on housing & crime in Orange County. Department of Criminology, Law and Society School of Social Ecology University of California – Irvine / Livable Cities Lab. https://livablecitieslab.socialecology.uci.edu/research/ 

• Property values have increased in more affluent neighborhoods after affordable housing was introduced. However, when homes are directly adjacent to affordable housing and sold within three years of the development opening, property values slightly decreased compared to homes that sold earlier.
• Sometimes, declines in property values were offset by increases in houses' price-per-square-foot, which negatively impacts sales prices as a result of a house's size when it was sold before affordable housing developments were introduced compared to being sold after. 
• No evidence shows that placing affordable housing in relatively wealthier neighborhoods significantly impacted the price-per-square-foot of nearby homes compared to affordable housing in higher poverty neighborhoods.
• Homes that showed the highest increase in value were located within ⅔ of a mile of affordable housing developments.

Nguyen, M. T. (2005). Does affordable housing detrimentally affect property values? A review of the literature. Journal of Planning Literature, 20 (15), 15-26. DOI: 10.1177/0885412205277069 

• The decrease of property values in neighborhoods depend on a variety of factors:
  • design and management of affordable housing,
  • compatibility between affordable housing and host neighborhoods,
  • the concentration of affordable housing.
• A study concluded that adding one subsidized unit within a quarter mile of a house has the same dollar impact on that house’s value as removing half a square foot from that house.   
• Property values in neighborhoods with abandoned houses and neglected or physically deteriorating properties can increase after affordable housing is introduced.
• When affordable housing shows no effect on property values, it is when: 
  • affordable housing is sited in healthy and vibrant neighborhoods,
  • the structure of the affordable housing does not change the neighborhood's quality and is responsive to problems and neighbor concerns,
  • the affordable housing is well-managed
  • affordable housing is dispersed 
• Evidence reveals that rehabilitated housing always has beneficial outcomes for neighboring property values.

Voith, R., Liu, J., Zielenbach, S., Jakabovics, A., An, B., Rodnyansky, S., Orlando, A. W., & Bostic, R. W. (2022). Effects of concentrated LIHTC development on surrounding house prices. Journal of Housing Economics, 56, Article 101838, 10.1016/j.jhe.2022.101838 

• LIHTC developments in Cook County, IL, had positive impacts on surrounding property values. In spite of evidence suggesting that property values decline after second LIHTC projects are completed, the positive impacts of the first and third affordable development outweighed the negative impacts.
• Even though spillover benefits were found throughout the county, in both lower-income and higher-income neighborhoods, the largest and most consistent impacts were found in lower-income neighborhoods.
• Research supports community developers’ argument that LIHTC properties can simultaneously help alleviate the shortage of affordable housing and help stabilize and ultimately improve economically distressed neighborhoods.

Woo, A., Joh, K., & Zandt, V. Z. (2016). Unpacking the impacts of the Low-Income Housing Tax Credit program on nearby property values. Urban Studies Journal, 53 (12), 2488–2510. DOI: 10.1177/0042098015593448

• LIHTC developments had a negative impact on surrounding property values in Charlotte, NC, while having a positive impact in Cleveland, OH.
• Cleveland’s housing market has experienced stagnation, shown by the lack of new housing construction and fewer sales transactions, juxtaposed with severe population loss and neighborhood destabilization. In an already stagnant housing market, any residential investment (including LIHTC developments) may stimulate the market. 
• Larger developments can mitigate the negative effects of LIHTC units – While subsidized housing influxes can contribute to lower property values, larger developments may alleviate these decreases. However, the impacts of LIHTC developments in middle and high-income neighborhoods were not statistically significant in Cleveland. 
• The results for high-income submarkets in Charlotte suggested that LIHTC developments had negative impacts on neighboring property values. A large number of LIHTC units in high-income neighborhoods had large spillover effects on neighboring property values in Charlotte. 

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Affordable Housing's Affect on Crime

The Bottom Line

To summarize, affordable housing either has little-to-no impact on crime or can mitigate and reduce crime in neighborhoods.

• Proximity to affordable housing was not found to be associated with increases in neighborhood crime. In some cases, affordable housing can even lead to slight decreases in crime.​
• ​Management practices and design features can mitigate and prevent potential crime.​
• When unhoused people receive supportive housing services, police interactions and arrests with this community typically reduce in short and longer terms (Cunningham et al 2021). ​
• ​Effects on neighborhood crime are typically small regardless of the types of public housing (larger housing projects, vouchers, or scattered-site housing), if they exist at all (Lens 2013).

What Research Suggests

Albright, L., Derickson, E. S., & Massey, D.S. (2013). Do affordable housing projects harm suburban communities? Crime, property values, and taxes in Mount Laurel, NJ. City Community, 12 (2), 89–112. doi:10.1111/cico.12015 

• Studies found that living close to assisted housing was not associated with increases in crime in Denver, CO.

• Affordable housing can be developed in an affluent suburban community without increasing crime or other forms of social disorganization.
• By studying trends in Mount Laurel and surrounding municipalities, researchers found no significant differences in crime rates before or after affordable housing developments were introduced. This outcome was likely achieved by how developments can mitigate potential negative effects and promote social cohesion and security via: 
  • judicious selection of residents,
  • close cooperation between managers and residents,
  • access to onsite after-school programs,
  • organization of a town watch.

Cunningham, M., Pergamit, M., Gillespie, S., Hanson, D., Oneto, A. D., & Leopold, J. (2021). Denver supportive housing social impact bond initiative. The Denver Supportive Housing Social Impact Bond Initiative. The Urban Institute. Urban.org. https://www.urban.org/policy-centers/metropolitan-housing-and-communities-policy-center/projects/denver-supportive-housing-social-impact-bond-initiative 
Crime 

• This study suggests offering housing, necessary supportive services, and preventive investments can help unhoused people find stability while reducing the public costs of the homelessness-jail cycle.
• After providing supportive housing services to a treatment group of unhoused participants, police interactions went down with eight fewer police contacts (34% reduction) and four fewer arrests (40% reduction) than those who received usual services in the community.

• Three years after this study, participants who were referred for supportive housing had almost two fewer jail stays (30% reduction) and spent an average of 38 fewer days in jail (27% reduction) than those who received usual care in the community.

Freedman, M., & Owens, E. G. (2011). Low-income housing development and crime. Journal of Urban Economics,  70 (2-3), 115-131. https://doi.org/10.1016/j.jue.2011.04.001  

• Constructing low-income housing in particularly disadvantaged communities can reduce robberies and assaults by about 2%.  
• A failure to find a significant change in property crimes is not surprising, which is consistent with both:
  • an increase in the returns of committing property crime
  • an increase in the probability that citizens in revitalized areas will contact the police. 
• Based on an examination of tract-level data for two select cities, it appears as if the observed reduction in violent crime is driven primarily by reductions in areas that are targeted for investment and that receive more development.
• While the magnitude of the effects we find are modest compared to reductions in crime caused by legal sanctions, the social benefit of this crime reduction is an important positive result of investment in the housing stock of distressed communities.

Goetz, E. G., Lam, H. K., & Heitlinger, A. (1996). There goes the neighborhood? The impact of subsidized multi-family housing on urban neighborhoods. Center for Urban and Regional Affairs and Neighborhood Planning for Community Revitalization.  

• This study found that converting privately owned properties into nonprofit-owned subsidized housing reduced the average level of criminal activity at those sites - fewer crime incidences were reported after buildings were converted into subsidized housing than there were before the buildings became subsidized.
• Only two of the fourteen sites studies showed an increase in crime after conversion, however:
  • in both cases, the increase was an average of less than one police call per month,
  • in one case, the building has never had more than one event per month since the conversion, 
  • both cases are far outweighed by several instances in which the police reported much fewer calls after the properties became subsidized.
• In most cases, there was no statistical difference between the amount of crime calls before or after properties were rehabilitated. 

Hipp, J., Iliff, C., Owens, E., Tita, G., & Williams, S. (2022). The impact of affordable housing on housing & crime in Orange County. Department of Criminology, Law and Society School of Social Ecology University of California – Irvine / Livable Cities Lab. https://livablecitieslab.socialecology.uci.edu/research/ 

• Regarding violent crimes, researchers found no evidence of increases after introducing affordable housing:
  • The number of aggravated assaults in blocks within 1/5 of a mile slightly declined after the placement of affordable housing and no differences were found at longer distances.
  • The number of robberies slightly declined after the placement of affordable housing at all distances from the development. 

• For property crimes, the number of burglaries after placement of affordable housing slightly declined at all distances from the property. 
• Researchers found no evidence to support that violent crimes increase after placing affordable housing in high poverty neighborhoods: 
  • violent crimes slightly decreased within 1/5 of a mile of affordable developments, and little difference at longer distances.
  • some evidence suggests that property crimes increase in high poverty neighborhoods after the placement of affordable housing - the average block within 1/5 mile has about one more property crime every two years, and blocks from 1/5 to ½ mile have about one more property crime every three years.

Lens, M. C. (2013). Subsidized housing and crime: Theory, mechanisms, and evidence. Journal of Planning Literature, 28 (4), 352-363. DOI: 10.1177/0885412213500992 jpl.sagepub.com 

• Subsidized households have too frequently existed in violent housing developments and neighborhoods.
• Whether looking at larger public housing projects, vouchers, or scattered-site public housing, the effects on neighborhood crime are typically quite small, if they exist at all.
• Physical design might play a role, but high-rise developments with middle and high-income people usually do not increase crime rates.
• Although the precise mechanisms through which subsidized housing may affect crime are less clear, it is most likely that concentrated disadvantage is the main factor when subsidized housing influences crime rates.
• Social disorganization and residential instability may also play a role, but 'concentrated disadvantage' is likely the first-order cause of each of those neighborhood attributes.​

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