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How Affordable Housing Impacts the Neighborhood

The idea that the country could use more affordable homes is widely accepted, however, homeowners and community groups often rebuff proposed low-income housing within their own neighborhood, believing, among other things, that such developments could drag down the price on their property.

Redfin study of more than 220,000 home sales provided data that researchers analyzed to determine whether such concerns are justified.

What they found is that low-income housing developments "had no consistent impact on the sale prices of nearby homes." In some metros, houses around the affordable addition even went up in price. In just four of the examined areas did prices dip following the introduction of low-income housing. The study's authors looked at 26 metro areas from 2007-2019.

In 18 of the 26 metro areas studied, no significant difference was detected in the prices of nearby homes sold before and after the construction of a low-income housing development, when compared with similar homes farther from the development but within the same neighborhood.

In four of the eight metro areas where significant differences were detected—BostonPhiladelphiaWashington, D.C., and Charlotte, NC—homes near low-income housing developments sold for more after the development was constructed. In the remaining four metro areas—ChicagoLas VegasPhoenix and Warren, MI—homes sold for less after low-income housing developments were built nearby.

"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," Redfin Senior Economist Sheharyar Bokhari said, citing a separate study. “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."

Across the board, 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 study found.

“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,” Bokhari said. “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.”

Redfin analyst Tim Ellis concludes, "There are still many unknown factors, but overall this study supports the idea that low-income housing does not degrade property values."

The full study is available at Redfin.com.

About Author: Christina Hughes Babb

Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media and Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning News, among others. Contact Christina at christina.hughesbabb@thefivestar.com.
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