Affordable housing, particularly high density, multifamily housing, will lower property values in the surrounding neighborhood – right? Not necessarily! This belief has been refuted by numerous studies conducted over a period of many years and in various locations. For example, a study, commissioned by the Family Housing Fund in Minnesota, studied affordable apartments in 12 Twin Cities neighborhoods and found "little or no evidence to support the claim that tax-credit family rental developments in the study eroded surrounding home values." [1]

Likewise, a study of six metropolitan areas – Atlanta, Boston, Chicago, Cleveland, Sacramento and Austin – by Harvard University's Joint Center for Housing Studies confirms that apartments pose no threat to nearby single-family house values. [2] A study of Low-Income Housing Tax Credit properties in Milwaukee and Madison, Wisconsin found that these developments did not reduce nearby property values. And, more recent work in New York City also found no adverse effects from these types of properties. [3] These studies and others show that property values are primarily determined by the condition of the particular property for sale and other broader, more complex factors such as overall area development and prosperity. [4] Nearby units of affordable housing have no significant impact on these other factors, which are the real drivers of property values.

Hunter's Park, Arlington VA -- photo courtesy of AHC Inc.

That said, some research suggests the effects on surrounding property values may depend on the context, concentration and scale of the affordable homes. One review of the research literature found that affordable housing has no adverse effects and may even have positive impacts on property values when well-dispersed. When highly concentrated, however, there may in some cases be more negative impacts on property values, especially in neighborhoods that already are facing other challenges. [5] This suggests the importance of carefully developed affordable housing strategies that ensure that concentrations of poverty are avoided and that affordable homes are well-designed and constructed to ensure they are strong community assets.

One of the major lessons from this body of research is that higher-density affordable housing that is well designed not only does not adversely affect property values, but may even enhance the value of existing homes in the neighborhood. Researchers at Virginia Tech University have concluded that attractively designed and landscaped higher density units actually increase the overall value of area single-family housing. [6] How? New apartments often signal that the local economy is healthy and growing. They also create the density needed to create more retail and other services, thereby increasing the attractiveness of the surrounding area. Finally, the residents of the new multifamily housing can bolster property values by a larger pool of potential buyers for existing owners when they decide to sell their houses.

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[1] A Study of the Relationship between Affordable Family Rental Housing and Home Values in the Twin Cities. [PDF] 2000. By Maxfield Research. Minneapolis, MN: Family Housing Fund.
[2] America's Working Communities and the Impact of Multifamily Housing. [PDF] 2004. By Alexander von Hoffman, Eric Belsky, James DeNormandie, and Rachel Bratt. Joint Center for Housing Studies of Harvard University and the Neighborhood Reinvestment Corporation.
[3] Low-Income Housing Tax Credit Housing Developments and Property Values. [PDF] 2002. By Richard K. Green, Stephen Malpezzi and Kiat-Ying Seah. Madison, WI: University of Wisconsin Center for Urban Land Economics Research.
[4] Higher-Density Development: Myth and Fact. [PDF] 2005. By Richard M. Haughey. Washington, DC: Urban Land Institute.
[5] A Review of Existing Research on the Effects of Federally Assisted Housing Programs on Neighboring Residential Property Values. [PDF] 2002. By George Galster. Washington, DC: National Association of Realtors.
[6] Price Effects of Apartments on Nearby Single-Family Detached Residential Homes (Working draft). 2003. by Arthur C. Nelson and Mitch Moody. Blacksburg, VA: Virginia Tech University.

We need more housing to provide homes for an ever-growing population. The issue is how to build and locate those homes in ways that make better use of public facilities. The perception is that new, particularly higher-density, housing will overburden our existing infrastructure. In fact, the opposite can be argued. A recent Brookings Institute study analyzing the costs of sprawl estimated that more than $100 billion in infrastructure costs could be saved over 25 years by pursuing better planned and more compact forms of development. [1] Locating new housing in existing communities can result in efficient use of existing police and fire protection, schools, libraries, trash removal, and other services, and requires fewer resources than establishing new services in more remote locations.

Schools often are a particular point of contention when it comes to higher density housing, such as multifamily homes. Data from the U.S. government’s American Housing Survey show that families with school-age children are more likely to live in low-density, single-family suburban and exurban housing. Single-family developments average 64 children for every 100 units, compared with only 21 children for every 100 units of low-rise or garden apartments and 19 children for every 100 units of mid- to high-rise apartments. The reason is that multifamily housing attracts predominantly childless couples, singles, and empty nesters. A study by the National Multi-family Council makes the point that, although apartment renters do not pay property tax directly, apartment owners do and pay at what usually are higher commercial real estate tax rates. A typical mixed-use development with retail, office, and apartments may be subsidizing the schools and other public services required by residents of low-density housing in the same community. [2]

Finally, higher-density housing can create economies of scale for shops, services, stores, and public transit. The result, proponents of infill and higher-density housing say, will likely be an increase in that community's revenue without significantly increasing the infrastructure and public service burdens.

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[1] Investing in a Better Future: A Review of the Fiscal and Competitive Advantages of Smarter Growth Development Patterns. 2004. By Mark Muro and Robert Puentes. Washington, DC: Brookings Institution Center on Urban and Metropolitan Development.
[2] Creating Successful Communities: A New Housing Paradigm. [PDF] 2002. Washington, DC: National Multi Housing Council.