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Low-income housing doesn’t affect nearby property value, says new study

Analysis of a decade of data in 20 major markets contradicts a common NIMBY argument

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A new report suggests that, contrary to long-held beliefs and popular assumptions, low-income housing doesn’t decrease the property value of nearby homes, buildings, and offices.

Conducted by Trulia, the study focused on the 20 most expensive metro areas of the United States, cities that have a need for additional affordable housing but often face significant local opposition to constructing more low-cost housing. Researchers looked at 3,083 projects financed using the federal low-income housing tax credit program between 1996 and 2006, and compared property values of buildings nearby (within 2,000 feet) with a control group located further away from the LITC projects (2,000 to 4,000 feet).

Drawing upon data from the U.S. Department of Housing and Urban Development (HUD) as well as Trulia home value data, the analysis found no significant difference between the two groups. When taken in aggregate, low-income units did not depreciate or devalue nearby property.

According to lead researcher and senior economist Cheryl Young, these results call into question a standard talking point, one often echoed by NIMBY groups.

“There’s a lot of myth and rhetoric that people hold onto,” she says. “But when we look at property values in general—and to be fair, these are expensive markets—it doesn’t really affect the value of surrounding property. You’re just adding supply.”

Low income graphic

Young felt the research suggests that similar results could be found across major metro areas, not just the high-priced neighborhoods in cities such as New York and San Francisco. While there was some variation—in Denver, LITC developments increased the value of nearby properties, while they slightly decreased the value of nearby buildings in Boston—the report suggests that was due to local factors. In Denver, for instance, many of the LITC projects were near recently revitalized and fast-growing neighborhoods, such as the areas adjacent to Coors Field, while in Boston, the clustering of low-income projects tended to push out other development activity.

“We want to engage in this discussion,” she says. “What are these ideas and opinions about low-income housing based on, empirically? We’re based in San Francisco, and any time affordable housing is uttered, it’s like a pejorative term. We wanted to look into why.”

Young sees this as the beginning of more research diving into pressing policy issues. This study, which looked at a time period during which prices were stable, sets up a good baseline for additional studies. Issues surrounding housing and segregation are especially important, she says, as the incoming administration begins setting policy and potentially rolling back Obama-era policies.