Does affordable housing affect nearby property values? And other FAQs
As the City of Chattanooga invests in affordable housing programs, here are five frequently asked questions on the matter.
By William Newlin
1. Why can’t our preschool teachers and bus drivers afford housing?
Currently, there’s just not enough available housing in Chattanooga for people who make less than $35,000 annually — that means many workers, such as some preschool teachers, nursing assistants, grocery store workers, and bus drivers, can’t afford to live in the community where they work.
This hasn’t always been the case, but Chattanooga’s population growth (including higher-earning newcomers), the decline in new home construction, and an influx of renters who can’t afford to buy a home, has led to a costlier housing market across the board, according to a recent housing assessment performed by the city and a consulting firm.
2. Will my property value go down if affordable housing is built in my neighborhood?
In a 2021 review of eight academic studies, researchers found that, in most cases, subsidized housing either increased surrounding property values or had little effect on them. In a 2022 study of Alexandria, Virginia (population 158,000), researchers from the Urban Institute noted a very small increase in the value of properties located within one block of subsidized developments between 2000-2020. The developments included those with a small number of subsidized “set-asides” among market-rate units, per the report.
3. What counts as affordable housing?
Housing is affordable if it doesn’t create a significant cost burden for Chattanooga’s working families, according to Nicole Heyman, Chief Housing Officer for the City of Chattanooga. And that price differs for everyone. The technical definition of affordability, according to federal housing agencies, is housing (including utilities) that costs 30% or less of a household income.
An “affordable rent” for someone earning $30,000 per year would be around $750 per month (including utilities), according to a City of Chattanooga report. But, the median rent for a one-bedroom unit in Chattanooga is over $1,200 per month. Currently, there’s an estimated gap of 1,800 units affordable to Chattanoogans earning $35,000 or less.
4. Is all affordable housing funded by the government?
No. Some affordable housing just occurs naturally in the housing market, and protecting Chattanooga’s naturally occurring affordable housing (NOAH) is one of Heyman’s key goals. A majority of the NOAH stock in Chattanooga was built before 1980, and the city aims to provide low-cost loans to landlords to keep up with maintenance costs, so that those housing options don’t go away.
Private owners can also apply for federal, state, and local funds to subsidize rents and they can make units available for voucher program participants. Nonprofits such as Chattanooga Neighborhood Enterprise and Habitat for Humanity also seek funding to build homes and rental properties that hit the 30% mark for various household income levels.
There are also government programs designed to keep housing costs below 30% of a household’s income. Public housing authorities, like the Chattanooga Housing Authority, build and manage some housing developments and offer a limited number of federal housing subsidies to families and landlords.
5. What is mixed-income housing?
Mixed-income housing refers to the creation of market-rate and affordable housing units in the same development. As mentioned, private developers can receive public funding to set aside units at below-market-rate rents while keeping other units at full price. And in strong markets, revenue from full-priced units could be enough to keep some units at below-market prices without a subsidy.
The planned Mill Town development near Oak Grove includes a partnership with Chattanooga Neighborhood Enterprise to provide affordable housing alongside market-rate apartments and businesses.
One benefit of mixed-income housing is increasing neighborhood diversity and reducing concentrated poverty. But policymakers have to take care not to displace families with lower incomes especially if mixed-income developments replace public housing.