Fact or fiction? Affordable housing myth busters

When it comes to affordable housing, there is one fact that is undeniable: the demand for affordable housing in the U.S. far exceeds the supply.

According to the Joint Center for Housing Studies of Harvard University’s (JCHS) “America’s Rental Housing 2024” Report, America’s stock of low-rent units continues to shrink. Over the last decade, the number of low-rent units dropped by a staggering 2.1 million, including a loss of 230,000 from 2021 to 2022 alone. The shortfall of affordable housing units is now estimated at 4.7 million to 7 million.

Many factors contribute to the shortfall, but one lessor acknowledged factor is the impact of misperceptions about affordable housing: what it looks like, how it is maintained, and who lives there. These misperceptions often impede the development of new supply as public and political opinion can be highly influential.

Here are five common misperceptions regarding affordable housing, along with some clarifying explanations.

Myth: Affordable housing only helps people at the lowest income levels.

Fact: Affordable housing helps people from the lowest income levels, below 60% area median income (AMI), up to 120% of AMI.

For context, it’s important to understand that AMI refers to the amount of income earned by the median or “middle” household in a given region. In other words, half of the households in the region earn more than the AMI and half earn less.  

AMI varies across metropolitan statistical areas (MSAs) but to put it into perspective, a farm worker or fast food worker typically makes less than 60 percent AMI, an administrative assistant, truck driver or construction work may be in the 60-80 percent AMI range, and a teacher or nurse may make 80-100 percent AMI.

As growth in rents and incomes have diverged, and rental affordability has decreased, the band of household incomes that have become housing cost-burdened (paying more than 30 percent of their income on housing) has expanded. It is no longer only the poorest households that cannot afford to live in our communities.

The housing affordability crisis in the United States has escalated to affect a broader range of income levels, including middle-income families. The National Institute of Building Sciences (NIBS) report titled “2024 Moving Forward Report: Housing Affordability”, states: “In recent years, the combination of a housing shortage, inflation, and higher interest rates increased the cost of both rental and purchase housing faster than wage growth, leading to higher percentages of consumers paying more than 30 percent and even 50 percent or more of their income for housing….The share of cost-burdened renters is rising fastest among middle-income households. Between 2019 and 2021, the largest increase in the share of cost-burdened renters was in the income group earning between $45,000 and $74,999, up 4 percent to 34 percent of renter households in that income bracket.”

Workforce housing is an important category of affordable housing as it targets these middle-income households, those with incomes between 80 and 120 percent of AMI. As noted above, individuals in this AMI range generally include teachers, healthcare workers, firefighters, and police officers. By offering rents lower than market rates, workforce housing ensures essential workers can afford to live in the communities they serve.

Affordable housing also benefits seniors and people with disabilities, especially those relying on social security to cover their living expenses. Affordable housing allows people on fixed incomes to have a roof over their head and a quality of life that would not be available, or affordable, if they had to pay market-rate rents.

Myth: Investing in affordable housing does not meaningfully impact individuals and communities.

Fact: Access to affordable housing enhances the quality of life for millions of people.

The U.S. Office of Disease Prevention and Health Promotion’s “Healthy People 2030” framework identifies housing quality as a social determinant of health. Numerous studies reveal the relationship between safe, affordable housing and better health outcomes.

Affordable housing contributes to positive health outcomes by providing housing stability and helping to ensure that, after paying their housing expenses, U.S. families still have enough resources to pay for other essential needs, such as food, childcare, and adequate healthcare.

Affordable housing communities also provide onsite supportive services that address specific needs to improve residents’ quality of life. These services might range from assistive services for disabled residents to afterschool tutoring, from free computer use for homework to help with resumes and job applications, from financial literacy programs to meal services.

To read more about the real impact supportive housing developments can provide, take a look at Lawson House, a 400-unit community in downtown Chicago, originally built in the Great Depression and used as a YMCA. The property was recently reconstructed, with significant upgrades being made to bring it up to modern standards. The reopening of the Lawson House marked a transformative moment for the community, ensuring a safe, clean, and supportive living environment for unhoused men and women. The building’s historical features and affordability were maintained by utilizing Low Income Housing Tax Credits (LIHTC) syndicated by Walker & Dunlop along with Historic Tax Credit equity.

Myth: Affordable properties are dated and rundown community eyesores.

Fact: Affordable housing properties are thoughtfully designed and sustainably built.

Unlike the boxy, depressing projects of the 1930s through the 1960s, affordable housing today puts much greater emphasis on aesthetics. The shift to visually appealing, sustainable housing serves the dual purpose of making affordable properties more efficient and more attractive to residents and existing neighbors. By matching the visual appeal of neighboring communities, affordable communities today fit seamlessly into the landscape.

Affordable housing rehab projects can also bring new life to abandoned buildings.

Furthermore, most affordable and workforce communities are clean, well-maintained properties. They are filled with residents who are hardworking, respected members of the community, who take pride in their homes and are considerate neighbors. They are not rundown, dilapidated properties that are overridden with crime and poverty. That is a misperception.      

To see some great examples of beautiful affordable housing communities made possible, in part, by Walker & Dunlop, check out High Point Uptown in Houston, Texas and The Montgomery in Allan, Texas.

Myth: Affordable housing properties bring down surrounding property values.

Fact: Affordable housing properties can increase surrounding property values.

This persistent myth unfortunately contributes to the phenomenon known as NIMBYism—the “not-in-my-back-yard” mentality. Multiple studies, including a 10-year housing study by Trulia and an in-depth analysis published in The Journal of Housing Economics, have shown that rather than reducing property values and increasing crime rates, affordable housing in a community leads to modest increases in property values and a decrease in crime.

The benefits of access to affordable housing extend far beyond the positive impact on residents of those properties. Communities with affordable housing see:

• More money spent in local communities.
• Increased tax revenues for local governments.
• Increased job opportunities, both during the construction phases and ultimately through long-term societal growth.
• Greater societal stability.

Affordable housing benefits the entire community, from residents in the lowest income categories to business developers and local governments.

By integrating affordable and workforce developments into more affluent communities, you provide residents of these developments with access to higher paying jobs and better schools, which, in turn, enables them to reach higher socio-economic levels and further contribute to the growth of their communities.

A great example of an affordable housing property that adds incredible value to its residents and the community around it is UNI Tower, Miami’s first 100 percent income- and rent-restricted residential skyrise. The property features 252 affordable and workforce housing units, 10,000 square feet of office space, and 4,500 square feet of ground-floor retail, all located in Miami’s Arts & Entertainment District. Read more about UNI Tower here.

Walker & Dunlop’s commitment to affordable housing

Despite all the myths surrounding affordable housing, the reality is simple; affordable housing is good for everyone: residents and community members, developers, investors, and local businesses.

Walker & Dunlop's "Community Starts Here" mantra and investment in our affordable housing platform demonstrates our commitment to supporting the development of critical affordable housing units for underserved populations.

If you are a community member contemplating whether your neighborhood, town or city should approve an affordable housing property, we urge you to consider the benefits it can provide.

If you are a developer, property owner, or investor considering entering the affordable housing space, we can help you. Walker & Dunlop has the platform, people, and passion to help you create, preserve, and revitalize communities where people can afford to live where they work, shop, and play. Connect with our experienced Affordable team today to discuss your next project.