The proposal that country requires more affordable homes is mostly a good idea, but just not to everyone. Homeowners and community groups often turn down proposals of low-income housing within their neighborhoods citing that such developments could push down the real estate prices in the area, among other things. Well, how true is this?
According to a Redfin analysis of over 220,000 home sales in neighborhoods with low-income housing developments in 26 metro areas across the country conducted between 2007 and 2019, “construction of low-income housing developments has had no consistent impact on the sale prices of nearby homes.”
The Redfin study further revealed that 18 of the 26 metro areas under study showed no significant difference in the prices of nearby homes sold before and after the construction of low-income housing development, compared to similar homes far from the development but within the same neighborhood.
The study further indicated that four of the eight metro areas— Boston, Philadelphia, Washington, D.C. and Charlotte, NC— that showed substantial variances, recorded homes near low-income housing developments selling for more after the development was complete; while the remaining four metro areas— Chicago, Las Vegas, Phoenix and Warren, MI— recorded homes selling for less after low-income housing developments were constructed within the neighborhood.
Moving on, how does the impact compare for communities living in poverty and those living in economically integrated neighborhoods?
“For children in low-income families, living in a neighborhood with less poverty can have a big impact on mental and physical health as well as long-term earnings throughout their life,” said Redfin senior economist Sheharyar Bokhari. “But economically integrated neighborhoods—those with low-income housing near homes for middle- and high-income households—are so rare because development of low-income housing often faces strong opposition from neighbors who are concerned that the project will lower their home values. These perceptions have made socio-economic segregation even more pervasive throughout the United States, further exacerbating social, racial and housing inequalities.”
So, how exactly does affordable housing affect neighborhoods?
While summarizing the study, the Redfin analysis states ‘In general, the more expensive the homes in a neighborhood, the more likely it was that the addition of a low-income housing development resulted in an increase in home prices in the neighborhood.’
“The data suggests that it can be a win-win to put low-income housing in expensive neighborhoods, benefiting both current homeowners and low-income residents,” explained Bokhari. “Because these projects are being built by private developers, they often have an incentive to identify places that have good prospects for growth. On the flip side, they’re also less likely to plan projects in areas that are less desirable.”
The study also found out that economically integrated neighborhoods are more desirable for homebuyers as they create a more self-contained community where residents who work in the community including teachers and service workers, can live in the community.
Conclusively, the analysis reveals that though there are still many unknown factors, “the study generally supports the idea that low-income housing does not degrade property values.” Instead, from what we have seen, low-income housing can push home prices higher and even bring more balance in the neighborhoods where they are built.
Work cited.
https://www.redfin.com/news/low-income-developments-home-values/
