Report: New affordable housing having positive impact on Alexandria property values

New affordable housing developments have a positive — if very slight — impact on housing values in Alexandria, according to a new report prepared for the City of Alexandria by the Urban Institute.

The report was presented to the Alexandria Housing Affordability Advisory Committee at a meeting earlier this week. The findings were presented by Christina Stacy, principal research associate for the Urban Institute. The presentation did start, though, with a notable disclaimer that Stacy is a board member at the Alexandria Housing Development Corporation (AHDC), one of the most active affordable housing developers in Alexandria.

“There’s a lot of opposition to affordable housing developments, [there’s] often a fear that developments will cause nearby property values to decline,” Stacy said. “But really, research has provided very little evidence that this exists.”

Stacy said a team at the Urban Institute used real estate website Zillow‘s tracking of residences — single-family homes, duplexes, coops and condominiums — in close proximity to developments with affordable housing components created between 2000 and 2020. Other weighted factors considered in study were proximity to the new development and whether the affordable housing was a component of a broader housing development or entirely affordable housing, like the Carpenter Shelter redevelopment.

Stacy said the calculation also factored in overall housing value increases. The results, she said, showed that affordable housing has a slight but notable positive impact on housing values in the immediate vicinity, though with the expected diminishing returns beyond that.

“We were going into this kind of expecting to find nothing, we weren’t really sure,” said Stacy. “What we consistently found was a positive and significant correlation between affordable housing developments and nearby property values. Affordable housing units are associated with an increase in nearby property values of .09%. That’s very small, but it’s not negative and that’s what’s important.”

Stacy said the study used a “repeat sales model,” looking at homes sold more than once and comparing price changes before and after new affordable housing was built. The sales were also compared with other similar properties that aren’t located near affordable housing developments, efforts that Stacy said aimed to “isolate the relationship between affordable housing and home prices.”

Stacy said the research showed a statistically significant effect on properties within 1/16 mile of the development, but little effect outside of that.

“Which is actually comforting for us because then we’re really thinking we’re isolating the impact of the building rather than just picking up developments that are going into neighborhoods that are already growing,” Stacy said, “but the fact that we’re not seeing that is comforting.”

Stacy said when breaking out housing that was “set aside” from market-rate units versus developments that are all committed affordable housing, her team was surprised to that see non-set aside buildings were most of what was driving the positive results. The report also found that the new developments still had a positive impact in higher-income neighborhoods.

The committee also discussed narrowing of criteria — breaking developments down by the average median income of the housing, for example. Stacy said it was possible, but the only concern was that fracturing the data samples too much could impact the reliability of the results. Commissioners also asked about the impact of density on home values, which Stacy said is being looked at in a separate report.

“You don’t have to give the results if it doesn’t turn out right,” one commissioner joked. “You can lie with statistics.”

“I hope you all should trust these results because that’s one thing we don’t do at Urban,” Stacy said. “We let the results [speak for themselves]. That’s why I go into these with a stressed heart because I know what I’m hoping to find, but we report what we find, and I could give you examples of studies we’ve done where we’ve reported what I wouldn’t necessarily have wanted, but you can trust these results because we report what we find no matter what we find.”

Stacy said there are a few factors that likely contributed to that positive correlation in Alexandria where others have had the opposite effect. One of the biggest, Stacy said, is that Alexandria has fairly strict requirements for design, development, maintenance and operation of affordable housing developments in comparison to other localities — Stacy singled out Norfolk in this — where city leaders said they often feel like they don’t have proper oversight.

“My interpretation of all of this is, given the well documented and proven benefits of affordable housing… we think these results support the development of additional affordable housing and I think other cities could learn a lot from how it’s done here in Alexandria,” Stacy said.

Helen McIlvaine, director of the Office of Housing, said the impetus for the report was public discussion surrounding a new AHDC project on Seminary Road. McIlvaine said one of the main questions from neighbors was how the new development would impact home values.

“We always get a question about ‘what will this do to our property values’ and this gives us some really great data to point to,” McIlvaine said.

Stacy said the full report is expected to be released in a month, with additional information on how the findings of the study can be reviewed and cross-checked.