Homes located near affordable family rental housing in the Twin
Cities displayed strong market performance after the affordable
housing properties were built, according to a recent study conducted
by Maxfield Research. The same homes had similar or stronger market
performance in comparison to those in a control group.
The study, which was funded by the Family Housing Fund of Minneapolis,
examined real estate market performance in 12 Twin Cities neighborhoods
where tax-credit rental housing developments for families were constructed
between 1993 and 1997. The study focused on dense neighborhoods,
or subject areas, with 100 or more owner-occupied homes within one
to three blocks. Researchers analyzed sales price per square foot,
percentage of sales to asking (list) price, and time on the market
for the three-year periods before and after the construction of
affordable housing in each subject area.
Extensive comparisons between the pre- and post-construction periods
and between the subject areas and the greater Twin Cities revealed
that the price trends for the studied homes were generally upward,
with decreased market time and increased sales-to-list price percentages.
Homes in subject areas had significantly higher average per-square-foot
price appreciation after tax-credit housing was built in the neighborhood,
and the subject areas and control markets performed similarly. In
only 4 percent of cases did market values in subject areas fall
below the range of values in the control group. In nearly all of
those cases, the poor market performance lasted for a year and was
isolated to a small group of homes.
Based on these findings, researchers concluded that the housing
markets in the subject areas performed normally following the construction
of affordable housing and that market fluctuations in the areas
studied were similar to those in the larger market.
For more information on the Family Housing Fund or to read the
full study, visit www.fhfund.org.