Affordable or subsidized housing has been, and will remain, a complex and emotional issue, steeped in history, economics, race and politics. Many people worry about crime, crowding or other problems allegedly created by these projects. Though experts largely agree that an ongoing lack of affordable housing has created a crisis and there will need to be significant investments in building more, the how, where and to what degree remains hotly debated.
As many states have already begun funneling money and resources toward affordable housing and federal legislators propose a broader expansion funding for low- and moderate-income housing developments, homebuyers are likely to hear more and more about the issue, and will likely begin to see these projects appear in their area. Though likely no one has the answers right now to all these questions, what real estate agents can do is what they always do: answer questions and provide clients with the best possible information.
What is ‘affordable housing?’
This might seem like the easiest question to answer. But even just defining “affordable” or “subsidized” housing can be a challenge, with a multitude of ways to delineate it and plenty of gray areas.
Michael Wilt works for the Texas State Affordable Housing Corporation (TSAHC), a non-profit that funds and advocates for affordable homeownership and rentals around the state. He says the best place to start is with what affordable housing isn’t rather than what it is.
“The affordable housing today is not your parent’s [affordable housing],” Wilt says. “It’s not the Section 8 developments that were built and financed largely by the government—these monolithic structures that took up entire city blocks, and everybody was there with a Section 8 housing voucher.”
Since the mid-1980s, the vast majority of new or rehabilitated affordable housing has been created through a program called the Low Income Housing Tax Credit, or LIHTC. Rather than directly funding or offering contracts for subsidized housing, the IRS instead uses tax offsets that encourage private investors to fund these projects, with oversight usually running through local or state housing authorities.
What this means, Wilt says, is that affordable and subsidized housing units cost the same to build and often look identical to market-rate housing—something agents should emphasize to clients, as many people still picture these projects as space-sucking eyesores made of cheap concrete.
“The finishes, the construction, the materials, the outside of the building—everything is going to look almost exactly like a market rate apartment complex,” he says.
Rent reductions are possible because of those federal tax credits, Wilt says, and often additional resources are dedicated to managing and maintaining the properties after they are built.
Jamie Ross is president and CEO of the Florida Housing Coalition, another non-profit focused on affordable living. In her state, Habitat For Humanity often builds for-sale homes for lower-income families—something that many imagine will cause problems in the neighborhood.
Ross says that Habitat homes might be “minimalist” in some ways and often are built in “depressed” areas. But in the long term, they are actually a good sign for a prospective homebuyer that a neighborhood or community is growing positively.
“The truth is, the data shows us that Habitat homes increase the value of a neighborhood…that maybe has a lot of homes that are landlord-owned and not homeowner-owned,” she says. “So, when Habitat homes come in, they uplift the neighborhood.”
What an “affordable” or “subsidized” designation means also varies widely, according to Warren Berzack, a broker focused on multifamily housing working for Lee & Associates in Los Angeles. Developers often receive incentives to add just a few affordable units to a larger complex or project that is mostly market rate. Other living spaces are restricted for certain demographics— disabled folks, domestic violence victims transitioning from shelters or the elderly.
It is important that homebuyers understand that not every affordable housing development is the same. Talking to someone from the local housing authority is a good way to find out more details about any given project, Wilts says.
Who lives in affordable housing?
One of the big questions or fears that many people have about affordable housing is who lives there. Often the worry is that a subsidized housing complex will be rife with criminals or unemployed people who will end up nuisances to the neighborhood.
The vast majority of affordable or income-restricted housing requires extensive credit and background checks, according to Wilt, disallowing people who have criminal histories that are violent or involve children in any way from living there.
According to Berzack, who says he has been involved with dozens of different types of affordable units in different areas, there is no single stereotype that can encompass people who need affordable housing.
Generally, these are folks who are “on their way up” after getting out of tough situations—single parents recovering from domestic violence situations, disabled people working to live independently and many who have lost jobs.
“It’s a lot of single mothers, it’s a lot of people coming out of homlessness—it’s not a gangbanger who is like, fully face-tattooed getting free housing. That’s not typically who is getting help,” Berzack says.
There are some subsidized housing complexes that are targeted toward “the most vulnerable citizens,” Wilt says, with more lax tenant screening standards. These projects are much more highly structured, with 24-hour onsite management and other security measures. Tenants are also given access to social workers and other services, according to Wilt.
Wilt says he “understands” the neighbors would have concerns about these projects, sometimes called “permanent supportive housing.” Usually, stakeholders are all very aware of any potential issues stemming from these areas, he adds, and want to work with community members to resolve issues.
These projects are also much cheaper and better for the community overall than the alternative—either a homeless shelter or leaving people to fend for themselves on the street, according to Wilt.
But the kind of affordable housing that is being built right now is more often targeted at younger, working-class people who work in schools or the service industry, according to Wilt, and is referred to as “workforce housing.”
As the pandemic has demonstrated, these jobs are incredibly important and having those workers in a community is vital. Wilt described a planned community that TSAHC was involved with that placed workforce rentals, million-dollar homes, and a retail and entertainment mall in the same neighborhood.
The idea was a huge success, he says, as the working-class folks had a plethora of jobs within walking distance while the high-income earners had easy access to shopping and other leisure activities.
“So, it’s a really good mix,” Wilt says.
Speaking to clients, real estate professionals should certainly start with the idea that subsidized housing occupants are no different from anyone else.
What are issues with affordable housing?
Being honest with prospective homebuyers will certainly require real estate professionals to talk about some of the negative things that affordable housing brings to a neighborhood. This includes things like crowding and parking, which Berzack says are often the first issues raised when he is proposing denser housing projects.
Wilt and Ross both acknowledge that with more people living in an area, there will be more cars on the road and more activity in the neighborhood. That is true of any housing, though, Ross says, and people living in subsidized housing actually contribute less crowding per capita compared to others, as they are more likely to carpool or use public transit.
Increased school enrollment or overcrowding of schools, and potentially increased taxes if new schools are needed, are other concerns. Wilt says it is certainly something to keep in mind, and that sometimes districts do have to fund new school buildings to accommodate an influx of new students, thereby raising taxes.
But both Ross and Wilt point out that without affordable housing school districts cannot function, as many of their workers—from teachers to bus drivers—cannot afford market-rate real estate nearby.
“Schools need teachers, and teachers don’t get paid well,” Ross says. “Plus you have teacher’s aids, you have bus drivers, you have janitors—a lot of people are needed to run a school.”
A myth that many people bring up is that affordable housing will bring neighboring property values down—something Wilt says has not been borne out by data. He cited a 2016 study by Trulia that found no statistically significant effect on property values when affordable housing was built nearby.
Berzack says that in his professional experience, affordable housing often indirectly brings up neighboring property values because new housing and new people almost always bring in businesses and other investments.
“Construction, no matter what it is, breeds more construction and more redevelopment. Old stuff gets torn down and new stuff—better, higher density—fills that need,” he says.
Ross says that, in her experience, people who balk at buying a home or living near subsidized housing often have had negative encounters with poorly-run projects or apartments. Real estate professionals in Florida have begun to refer to subsidized homes and apartments as “attainable housing” in order to bypass the stigma, according to Ross, with the aim of helping people understand that it is an overall positive thing for nearly every community.
“We have people who come…and they’re like, ‘I don’t want public housing.’ And they’re thinking about what they had at home, and that really just doesn’t exist here,” she says. “The fact is, if you don’t have affordable housing in your community, you won’t have restaurants. You won’t have schools. You won’t have any of the things you need to make your life pleasant [and] liveable.”
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas to jwilliams@rismedia.com.
