In the pantheon of misconceptions about affordable housing (and there are many — that it attracts less desirable residents, is inherently built of lesser quality and will drag down a neighborhood), there is the myth that a community with affordable housing couldn’t possibly be good for business. I am here to tell you that is wrong.
Modern affordable housing attract a wide, diverse range of residents and is built of quality that matches or sometimes exceeds that of market-rate housing. Not only that, but affordable housing can be a much-needed boon to local, neighborhood businesses and larger companies alike.
The entire affordable housing real estate ecosystem — developers and builders, architects, property managers, and those in law and finance — stands to benefit from creating and preserving this stable asset class. Why? Affordable housing stays rented; most properties have waiting lists. And the rents are more reliably paid, often through a voucher system that ensures it. Unlike luxury properties with occupancy rates that fluctuate with the economy, affordable housing rentals remain steady.
However, benefits are best accrued to those who are willing to learn about how affordable housing functions in a community. A potential investor who gains a good understanding of the following economic benefits of affordable housing is in an optimum position to invest and build profitably.
Increased Spending Power
Those living in affordable housing are able to spend substantially more on nutritious food and on healthcare.
Rent is the single biggest expense for most people, and often the most worrisome. When low- to middle-income families know that they can afford their rent each month, it frees up their ability to spend more on other essential items. Additionally, when affordable housing properties also offer quality resident services, assisting their communities with health, nutrition and financial decision-making, the benefits become evident in the area. We have seen this effect as more and more shops, restaurants and healthcare facilities have opened in areas where NHPF has properties.
Those seeking to invest in affordable housing where residents can increase their spending power need to have “boots on the ground” in communities that have already attracted housing previously. Success breeds more success, so becoming well-versed on a community’s makeup, conducting studies, and meeting with local officials, those in development and construction, etc. can provide an excellent snapshot of opportunities to build new affordable housing or invest in rehabbing older stock in need.
Building, preserving and sustaining affordable housing requires a cadre of construction tradespeople, property managers, leasing agents, security staff and others — 161 local jobs on average in the first year alone.
And that is just the beginning. Local businesses are necessary to provide this workforce with needed resources, from food to fuel, restaurants to recreation and so much more, spurring even more hiring. Smart developers can leverage these increases in commerce to create opportunities to provide more housing for employees and attract more business to the area. Creating strong local relationships is key here.
Increased Taxes And Other Revenue For Local Governments
It has been reported that building 100 affordable rental homes generates $2.2 million in sales and other taxes, as well as additional local government revenue from tolls, city fees, etc. And as these benefits are accrued to a local municipality, it becomes more likely that cities will support and even help fund more affordable housing.
In our experience in markets like Washington, D.C., or Chicago, once affordable properties gain traction as desirable places for low- to middle-income people to live and raise families, it behooves cities to court more development. Professionals seeking to capitalize on this interest can perform the necessary due diligence, and often partner with a knowledgeable not-for-profit developer to make the process go smoother.
For instance, in our foundation’s preservation of an affordable housing development in Houston, it was found that the development played a major role in increasing neighborhood security and lowering crime. Following the renovation of the neglected low-income housing property in an underserved neighborhood, resident quality of life drastically improved with the incorporation of new and enhanced amenities and community spaces that were previously unavailable or poorly maintained. Crime at the property was reduced, allowing residents to finally feel safe and secure in their own homes. These successful efforts to improve conditions at the property convinced city officials to keep Nathanial Q. Henderson Elementary School open, providing another linchpin in the revitalization of the community.
The bottom line is everyone in the affordable housing equation benefits from its creation and preservation. This includes those looking for homes they can afford, the local businesses that serve them, and the investment and development teams that provide the housing that helps keep a community vibrant and prosperous.