Research Shows Affordable Housing Developments Increase Property Values Nearby
Affordable housing, townhomes, and apartments are often unwelcome additions for neighbors concerned with impacts on property values.
Dejan Eskic is a senior research fellow at the Kem C. Gardner Institute at the University of Utah. His research explores the effects newly built apartment buildings in Salt Lake County have on property values nearby.
"Those homes that were within a half a mile and compared them to those homes that were further than half a mile. And what we found out was pretty interesting too, that homes throughout the county typically that are closer to the apartment had a stronger appreciation than those homes that were further away. They appreciated about 1.4% stronger than homes ever further away."
He said access to amenities could increase home values and bring a new buzz to an area by creating more vibrant, walkable communities. He said it comes down to what the community values.
"We saw a lot of instances where apartments have gone in and brought in some sort of amenity with them whether it's trails or open space, they made the community more or less walkable in certain places. That in itself brings value when you bring new residents, new dollars to a community. So, that in itself is looked at as an investment. So, you have more support for your local retail, more support for your local arts community. You now have a bigger tax base because you've added more residents on a per-acre basis. There are studies like this all over the country that look at apartment impacts on home values and that's kind of some of the major takeaways in the literature.”
Real Estate Developer CW Urban, is doing a project, The Village, in Silver Creek. President Darlene Carter said it’s a 38-unit development with 24 designated as affordable. She said it's common to get pushback on multi-family developments.
"There always is resistance from the greater community because I think the notion is, or the thought process is, that they feel like it's going to somehow affect their property values. But the truth is that just hasn't seemed to be the case in all of Silver Creek development. Twenty percent of the units are going to have an affordable component or be considered a workforce unit."
She said the notion that someone's property value would go down because it's next to a workforce unit isn't valid.
"It hasn't affected the insatiable appetite for the people who want market-rate units in the county."
Eskich said the housing crisis was terrible before COVID-19, when 60% of renters could not afford a medium-priced home of $440,000. Now, he said it's up to 80%.
"This is one of the unhealthiest housing markets in our nation's history because it feels so out of reach for so many. The divide is getting bigger between those who can afford it and those who can't. Yeah, so if we just look at how many renter households there are in the state, 80% of them can't afford a medium-price home right now. Summit County, for example, in one year, the price appreciated $350,000 for the median-priced home. You went from the mid 800's to $1.2 million."
Eskich said there's a frustration people feel with growth and changes to their communities. It's critical to know the general plans of a neighborhood when you buy a home or property.
“Everybody should understand what their community's general plan is. I often hear, especially in growing communities, where somebody buys a home and then they're upset that the farm next door or the open space next door was sold and is going to be developed on."