Affordable Housing Part 2: Fact Checking NIMBY’s Greatest Fears
Note: This is the second part of a series. The first part looked at the affordable housing crisis in the United States, and why it should matter to all of us. You can read that part here.
For most of the time we have owned it, our house sat about 100 yards from an “affordable housing” complex: a set of densely-packed, low-cost apartments, mostly occupied by families who had recently immigrated to the US. Over time we watched as our home increased in value in line with the rest of the city.
Eight years ago, a developer bought the complex, evicted the tenants, tore down everything and replaced them with schmancy, upscale apartments. Our house continued to increase in value… in line with the rest of the city.
It didn’t seem to matter to the value of our property if affordable housing was in our backyard or not.
In the first part of this series, I looked at the overwhelming bipartisan support Americans have for building more affordable housing. So why haven’t we solved this problem yet? There are a lot of reasons that I will take up in a future post, but I want to start with NIMBYism – we are for affordable housing in theory, but Not if it happens In My Back Yard. So when a developer or a nonprofit or a city or county announces an intention to build a couple of lower cost homes or apartments in our neighborhood, we go ballistic.
There are two different categories of NIMBY’s. One is homeowners in wealthier areas concerned that new affordable housing will cause their existing property to go down in value. The other is renters and rent advocates in poorer areas concerned that attractive new affordable housing will make the area more desirable, and rents will go up. Interestingly, in most circumstances, neither of the NIMBY fears appears to be correct.
Does new affordable housing drive down the value of neighboring property?
It’s an article of faith that building affordable housing in a community hurts property values. But what if that faith is flawed?
The argument by NIMBY’s is that if new, less expensive housing comes in to their neighborhood, it will drive down the value of existing homes. But I’ve looked at a bunch of reports studying that question, and the evidence is not what you might think.
Here are some of them from a few years ago:
- A group called the North Carolina Coalition summarized 36 studies: the vast majority found no impact of affordable housing on surrounding property values; several found positive effects; one found possible negative effects.
- The California Redevelopment Association reviewed 31 studies: 7 found positive effects; 19 found no effects; one study found negative effects; 3 were inconclusive
- A Wayne State University literature review found several different types of subsidized housing do not have negative effects — unless it is highly concentrated;
- A San Francisco State review of 17 studies found that in 11 of the studies affordable housing had a neutral or positive impact; 5 studies found mixed effects; one documented negative effects.
More recent studies are generally consistent with those findings: an NYU study looking at federally-subsidized developments found that they “have not typically led to reductions in property values and have in fact led to increases in many cases.” A Stanford study found that affordable housing projects significantly increased property values in lower income areas and slight decreased values in higher income areas. Most recently, an Urban Institute study found that prices of neighboring homes went up slightly following location of affordable housing projects.
Does new affordable housing in a neighborhood drive up rents in existing apartments or rental homes?
NIMBY’s in lower income neighborhoods worry about the opposite effect. If new affordable housing comes into a neighborhood, they fear it may make the neighborhood more attractive, and landlords will raise rent, making their housing less affordable.
There have been studies on that too, from New York City to San Francisco to Helsinki, each finding rents don’t tend to increase. A study of several US cities by the Upjohn Institute found that existing rents actually decrease by roughly 6% when new affordable apartments become available in a neighborhood, probably as a result of landlords having to be more competitive in pricing.
So there is some evidence that NIMBY’s biggest worries shouldn’t be worries. But that doesn’t mean NIMBYism won’t persist. Change is a frightening thing; we fear what is different. It’s going to take openmindedness from a wide range of people to solve the problem.
-Leslie
Coming up in Part 3: There’s a movement across the country (and leaking into other parts of the world) called YIMBY - Yes In My Back Yard — made up of people who are actively seeking to make it easier to build affordable housing. I’ll look at what they’re doing to speed up the permitting of new housing in their neighborhoods, and what that might look like in your home town.
References:
NYU “summary of summaries” on impact of affordable housing on surrounding property values: https://furmancenter.org/files/publications/Does_Federally_Subsidiezed_Rental_Housing_1.pdf
Stanford study: https://web.stanford.edu/~diamondr/LIHTC_spillovers.pdf
Impact of new affordable housing on existing rental prices: https://research.upjohn.org/jrnlarticles/219/
Cato Institute on affordable housing in North Carolina: https://www.cato.org/policy-analysis/keeping-north-carolinas-housing-affordable