Study Shows Housing Credit Benefits Individuals and Neighborhoods

In June, New York University’s Furman Center for Real Estate and Urban Policy released a study, commissioned by the Local Initiatives Support Corporation (LISC) and Enterprise, examining the effects of the Low Income Housing Tax Credit (Housing Credit) on developments in New York City.

The study discovered individuals in Credit-financed apartments received substantial economic benefits.  In one example, low-income residents of a Credit-financed development in the Belmont area (Tri-Bel) paid $525 per month, or $6,300 per year, in rent, compared to the $12,300 per year rental cost of market-priced units in the same area.  The study found the Credit-created rent savings produced a boost in discretionary income of approximately $4,500-$10,500, allowing families to spend more on health care, child care, education, and savings.

The report also discussed the Credit’s impact on the neighborhoods where Credit-financed developments were located.  Both the developments studied demonstrated what the study calls “capitalization effect.”  Property prices prior to development of the Tri-Bel buildings were 6.5 percent below those in the surrounding area.  After renovation, property prices increased by a total of 19.2 percentage points relative to nearby properties.   In Creston, the gap between the Housing Credit property price and the prices of nearby properties fell by 15 percentage points after completion of the development.  This reflects the increase in neighborhood quality, relative to other neighborhoods, perceived by the market.

The Furman Center determined that neighborhoods benefit from Housing Credit investment not just in terms of property value increases, but also from the increase in purchasing power available to support local businesses.  New purchasing power totaling millions of dollars has been created throughout New York City due to the increase in discretionary income resulting from affordable housing. 

The Center’s study also concluded that new or rehabilitated buildings improve neighborhoods, regardless of income level.  The property values of middle-income neighborhoods also have increased due to Housing Credit investment.