A study by Cheryl Young of Trulia found that low income housing funded by the Low Income Housing Tax Credit (LIHTC) did not impact the value of nearby homes. Her analysis included 3,083 LIHTC developments in 20 of the least affordable housing markets. Her study disproves the belief that low income housing necessarily reduces nearby home values.
LIHTC provides tax credits to investors who provide capital for housing affordable to households earning less than 50% or 60% of their area median income (AMI). Young examined changes in nearby home values before and after a LIHTC development was completed. She compared the value of homes within 2,000 feet of LIHTC developments to homes located between 2,001 and 4,000 feet from the developments. She focused on the years of 1996 to 2006, prior to the housing crash. She found that, in most cases, home value changes were similar for homes at both distances, indicating that the low income housing did not influence them.
There were few exceptions. In Boston, Young found that homes closest to LIHTC developments experienced a drop in value relative to homes between 2,001 and 4,000 feet away. She suggests that the concentration of LIHTC developments in certain neighborhoods could explain that effect. Conversely, she found a positive impact of LIHTC development on the value of homes less than 2,000 feet away in Denver. She attributes that impact to the high demand for real estate in some neighborhoods in downtown Denver where the LIHTC developments were completed.
There Doesn’t Go the Neighborhood: Low-Income Housing has No Impact on Nearby Home Values is available at: http://on.trulia.com/2g1opmN