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Living near affordable housing may boost home values, new study finds

Alexandria lawmakers have been considering allowing buildings to be taller or have more apartments than what is otherwise allowed in exchange for contributing to the city’s push to boost affordable housing numbers. (Sarah L. Voisin/The Washington Post)
5 min

There’s a question that comes up over and over again when new affordable housing projects are being pitched to homeowners in cities like Alexandria: How will this affect home prices?

The widespread assumption, elected officials say, is that new public or subsidized housing units will cause a depreciation in the value of nearby homes. But a new study from the Urban Institute think tank indicates that in small, high-density cities like Alexandria, the opposite may be true.

Researchers found that those living within roughly one city block — or 1/16th of a mile — of a new affordable housing development will probably see a small, but statistically significant, increase in property value, thanks to their proximity.

Using Zillow assessor data and real estate databases, researchers looked at the resale value of homes that were sold one or more times between 2000 and 2020. They then compared those home values before and after an affordable housing development was built nearby.

“You might expect that there could be a potentially small negative impact on surrounding homeowners, or what most of us expected was to see no impact at all. We were very surprised to consistently to find a small, but statistically significant, positive relationship between the two,” said Christina Stacy, one of the study’s lead researchers and a principal research associate at the Urban Institute.

To ensure that the results were not being skewed by mixed-income developments that offer affordable housing units alongside market-rate homes, researchers conducted a version of the study that eliminated those types of buildings. In that iteration, Stacy said, the average home-value bump that property owners saw after new affordable housing was built down the street appeared to be even larger than those seen in the group that included mixed-income buildings.

“There is already so much evidence for the benefits of affordable housing — we know it reduces homelessness, lifts people out of poverty, improves health outcomes, helps kids succeed and stay in school,” Stacy said. “So the fact that we don’t see any negative effect [on home prices] is really huge. Not only that, but we’re seeing a consistent positive impact. I hope that helps leaders here and in other jurisdictions consider expanding their affordable housing stock.”

On the day the study was published, Mayor Justin Wilson (D) received an email from a resident worried about the implications of building housing for poor people near more affluent communities. This type of communication is common, the mayor said, especially when elected officials begin discussing new proposals for adding affordable housing units to certain parts of the city.

Alexandria council fails to allow new affordable housing

Alexandria lawmakers have been considering an ordinance that would expand developers’ ability to apply for “bonus density” — allowing buildings to be taller or have more apartments than what is otherwise allowed in zoning code — in exchange for contributing to the city’s push to boost affordable housing numbers. The proposal has already raised alarm among some homeowners in parts of the city’s Old Town, who say they fear it would permanently alter the historic riverfront neighborhood.

Previous proposals for new developments that included a number of additional affordable housing units have frequently led to clashes among residents. In February, several civic groups citing concerns about increased density and traffic unsuccessfully opposed a development project in the Holmes Run neighborhood that is expected to include more than 350 affordable units. Last year, a similar campaign against a seven-story, 57-unit affordable project in Old Town led some preservationists to say the structure was so out of character it was akin to putting “lipstick on a pig.”

Wilson said he is hopeful that the Urban Institute study — and others like it — can be used to allay fears among residents by providing empirical evidence that affordable housing developments will not hurt their bottom line.

“For most folks, the ownership of your home is your primary investment. Anything that you perceive might reduce its value, even if it’s not an accurate assumption, you’re going to be concerned about it. I get that,” Wilson said. “I think there are certainly people who hear ‘affordable housing’ and make certain assumptions based on some of the worst managed public housing projects of yesteryear — never mind the fact that we’re mostly talking about new, modern housing that is more likely to house firefighters, teachers, plumbers, grocery store workers. People who help our community.”

The affordable housing units cited in the study are a mix of public housing and subsidized housing geared toward different income levels that range from very low-income families, who earn between 0 and 30 percent of the area median income ($42,690 a year for a family of four as of 2022, according to the U.S. Department of Housing and Urban Development), and more moderately affordable homes meant for those in the 80th percentile ($113,840 a year for a family of four).

Stacy said she hopes more research can be done to examine the specific impact different affordable housing developments have on property values and how other outside conditions — demographic data, density and community development, etc. — might alter outcomes.

The research was commissioned by the city of Alexandria and, as a result, focuses narrowly on that community. But, Stacy said, the report she and her team produced outlines the steps they took to evaluate affordable housing developments’ impact on surrounding home values in the hope that other jurisdictions will conduct similar analyses.

Alexandria Councilwoman Sarah Bagley (D), who works for an affordable housing nonprofit, said the Urban Institute research is “a start,” noting “there are truly unique scenarios related to housing markets, and I’m willing to concede what might be provably true for Alexandria may not be true everywhere else.”

“But let’s find out,” she added. “If other cities, other think tanks, can reproduce this kind of research, it will be more than just a start.”

Teo Armus contributed to this report.