“Not in my back yard” – A common expression by supposed proponents of affordable housing. Opponents to subsidized development make claims of lowered property values, increased crime, and more traffic, however, is affordable housing actually directly correlated with these issues? At least with regards to property values, the answer is a resounding “no.” The claim that affordable housing invariably lowers property values is in fact a myth. There are a few factors by which affordable housing affects property values, namely, neighborhood composition and characteristics about the affordable housing site (“Does Affordable Housing Detrimentally Affect Property Values? A Review of the Literature”, Nguyen, Journal of Planning Literature, 2005). Mai Thi Nguyen suggests that negative effects associated with affordable housing are small compared to other factors which influence property values if the effects even exist. Nguyen puts the fault of decreased property values after the development of affordable housing in the hands of the designers and managers of the properties. When the housing is incompatible with the existing housing of the host neighborhood, property values decrease. Not only does the compatibility of the housing matter but as does the composition. It is no surprise that property values are lowered when affordable housing is clustered together in already declining neighborhoods.
Now, it’s great to know that property values are not largely affected by the construction of affordable housing, but this fact still does not address the problem of people with the “Not In My Back Yard” attitude. These are they type of people that vehemently against any negative externality no matter how inconsequential. This is not to say that these people are wrong or selfish, many people buy houses as investments and it’s only natural to want to protect one’s investment from depreciation. So it is to no comfort that MIT researchers conclude that the “introduction of large-scale high density mixed income rental developments in single-family neighborhoods does not affect the value of surrounding homes” because even the threat of lowering property values dissuades homeowners to the idea of affordable housing in the neighborhoods (“Effects of Mixed-Income, Multi-Family Rental Housing Developments on Single-Family Housing Values,” Pollakowski, Ritchay, Weinrobe, MIT Center for Real Estate, 2005).
If homeowners are unwilling to change their minds about affordable housing due to possible loss of value then what will bring them to the other side? The solution – an incentive. If I were to say that affordable housing could potentially increase property values it would sound too good to be true, but it is in fact a possibility. A fairly recent study shows that “community-controlled, market-responsive development organizations can indeed spark a chain reaction of investment that leads to dramatic improvement to neighborhoods. Advanced econometric analysis shows that CDC investment in affordable housing and commercial retail facilities have led to increase in property values…that are sometimes as great as 69 percent higher than they would have been absence of the investment. In essence, the community development corporations did more than just develop affordable housing, they brought in business and nonprofit organizations which led to “investment agreements by local business, public pressure to steer public and for-profit development in community-friendly directions, and self-help efforts to improve neighborhood conditions and create new opportunities for families. (“The Impact of Community Development Corporations on Urban Neighborhoods,” Galster, Levy, Sawyer, Temkin, Walker, Urban Institute, 2005).