Real estate pricing research provides evidence that properties potentially exposed to perceived or actual risks may experience price impacts. Looking Under the Hood reviews publications that illustrate the theoretical, methodological, and data challenges faced by scholars and practitioners studying detrimental conditions and their impacts on property values.
How does affordable housing affect property values and crime rates in Orange County? Amidst a housing shortage a recent study conducted by the University of California Irvine (UCI)’s Livable Cities Lab (LCL) sought to answer this question.[1] The demand for affordable housing has grown but one of the biggest hurdles for development is public fear that this type of housing will negatively affect property values and increase crime. There is no empirical evidence for this fear, however. In fact, multiple publications have shown that affordable housing has a positive impact on property values.[2][3][4]
The LCL study examined two questions; “What happens to local housing values following the placement of affordable housing in Orange County?” and “What happens to local levels of crime following the placement of affordable housing in Orange County?”. Over 220 affordable housing developments were identified and considered in this study. “Affordable housing” was described as rental housing units in the Orange County area that fall within an Average Median Income of 30%-120%. Temporary, emergency, transitional, and other specialized categories of housing were not included.
The study evaluated residential home sales in Orange County from 2001 to 2020 that were within two miles of affordable housing developments and sold within three years of the development’s completion. Over 1,000,000 homes were used in the analysis and researchers focused on sale price and $/SqFt. The study controlled for inflation and other changes in the housing market to isolate the effect affordable housing has on property values and crime. The study found that home values increased between $10,000 within 1.5 miles of the development with an increase in price correlating to closer proximity to affordable housing. [5]
The study considered the effect affordable housing has on relatively wealthier neighborhoods compared to higher poverty neighborhoods and found no evidence suggesting the effect on home prices was different between the two.
Crime was also considered in this study. The research team gathered, and aggregated data points of crime rates using census blocks and found no increase in violent crimes and robberies following the placement of affordable housing; in fact, there was a slight decline in crime in some areas. The study found a small increase in motor vehicle thefts and larcenies near affordable housing developments. A very small increase in property crime was seen in high poverty neighborhoods after placement of affordable housing, but the increase was about one more crime every two years.[6]
The results of this study suggest that affordable housing positively affects housing prices and crime rates decrease or essentially stay the same after affordable housing developments are opened. This conclusion contradicts commonly held beliefs about the effects of affordable housing and it is hoped that the study will encourage the development of affordable housing in Orange County.
[1] Hipp, Iliff, Owens, Tita and Williams, Department of Criminology, Law and Society School of Social Ecology University of California – Irvine. “The Impact of Affordable Housing on Housing & Crime in Orange County” Livable Cities Lab (LCL).
[2] Galster, George. 2002. “A Review of Existing Research on the Effects of Federally Assisted Housing Programs on Neighboring Residential Property Values.” Detroit: Wayne State University.
[3] Albright, Len, E.S. Derickson and Douglas S. Massey 2013. “Do Affordable Housing Projects Harm Suburban Communities? Crime, Property Values, and Taxes in Mount Laurel, NU. City and Community.12:89-112.
[4] Center for Housing Policy. 2009. “Don’t Put it Here! Does Affordable Housing Cause Nearby Property Values to Decline?” Washington, DC: Center for Housing Policy.[5] Ibid, page 1