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Home prices in Alexandria have risen near housing projects, study finds

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There’s a question that keeps coming up when new affordable housing projects are presented to homeowners in cities like Alexandria: how will it affect home prices?

The common assumption, according to elected officials, is that new public or subsidized housing will cause the value of nearby homes to depreciate. But one new study from the Urban Institute think tank indicates that in small, high-density cities like Alexandria, the opposite may be true.

The researchers found that those who live within about a block – or 1/16th of a mile – of a new affordable housing development will likely see a small, but statistically significant, increase in property value, thanks to their proximity.

Using data from Zillow appraisers and real estate databases, the researchers looked at the resale value of homes sold one or more times between 2000 and 2020. They then compared these values ​​before and after building a affordable subdivision nearby.

“You might expect there could be a potentially small negative impact on surrounding homeowners, or what most of us were expecting was to see no impact at all. We were very surprised to consistently find a small positive, but statistically significant, relationship between the two,” said Christina Stacy, one of the study’s principal investigators and senior research associate at the Urban Institute.

To ensure the results weren’t skewed by mixed-income developments that offer affordable housing alongside market-priced homes, the researchers conducted a version of the study that eliminated these types of buildings. In this iteration, Stacy said, the average increase in home value that homeowners saw after building new affordable housing across the street appeared to be even greater than that seen in the group that included mixed-income buildings.

“There is already so much evidence of the benefits of affordable housing – we know it reduces homelessness, lifts people out of poverty, improves health outcomes, helps children succeed and stay in school. “, said Stacy. “So the fact that we don’t see any negative effects [on home prices] is really huge. Not only that, but we see a consistent positive impact. I hope this helps leaders here and in other jurisdictions consider expanding their affordable housing stock.

On the day the study was released, Mayor Justin Wilson (D) received an email from a resident concerned about the implications of building housing for the poor near more affluent communities. This type of communication is common, the mayor said, especially when elected officials start discussing new proposals to add affordable housing to parts of the city.

Alexandria council not allowing new affordable housing

Alexandria lawmakers have considered an ordinance that would expand developers’ ability to apply for “bonus density” – allowing buildings to be taller or have more apartments than are otherwise allowed in the building code. zoning – in exchange for the city’s contribution to the city’s efforts to increase affordable housing numbers. The proposal has already raised alarm bells with some property owners in parts of the city’s Old Town, who say they fear it could permanently alter the historic riverside district.

Previous proposals for new developments that included a number of additional affordable housing units have often led to clashes between residents. In February, several civic groups citing concerns about increased density and traffic unsuccessfully opposed a development project in the Holmes Run neighborhood which is expected to include over 350 affordable housing units. Last year a similar campaign against an affordable seven-story, 57-unit project in Old Town led some conservationists to say the structure was so out of place it was like putting “lipstick on a pig.”

Wilson said he hopes the Urban Institute study — and others like it — can be used to allay residents’ fears by providing empirical evidence that affordable housing developments won’t harm their bottom line.

“For most people, owning your home is your main investment. Anything you perceive could reduce its value, even if it’s not an exact guess, you’re going to worry about it. I get it,” Wilson said. “I think there are certainly people out there who hear ‘affordable housing’ and make certain assumptions based on some of the most mismanaged social housing projects of yesteryear – not to mention the fact that we’re mostly talking about new modern housing that are more likely household firefighters, teachers, plumbers, grocery store workers, people who help our community.

The affordable housing cited in the study is a mix of social housing and subsidized housing suitable for different income levels ranging from very low-income families, who earn between 0 and 30% of the region’s median income ($42,690 per year for a family of four starting in 2022, according to the U.S. Department of Housing and Urban Development), and more moderately affordable homes aimed at people in the 80th percentile ($113,840 per year for a family of four).

Stacy said she hopes more research can be done to examine the specific impact that different affordable housing developments have on property values ​​and how other external conditions – demographics, density and community development, etc. – could alter the results.

The research was commissioned by the City of Alexandria and therefore has a close focus on this community. But, said Stacy, the report she and her team produced outlines steps they’ve taken to assess the impact of affordable housing developments on surrounding home values ​​in hopes that other jurisdictions will lead. similar analyses.

Alexandria Councilwoman Sarah Bagley (D), who works for an affordable housing nonprofit, said the Urban Institute’s research was “a start”, noting “there are some really unique scenarios related to housing markets, and I am willing to concede what could be proven true for Alexandria may not be true everywhere else.

“But let’s find out,” she added. “If other cities, other think tanks, can replicate this kind of research, it will be more than a start.”

Teo Armus contributed to this report.