Investments in this strategy aim to increase resources available after housing payments by improving availability of units priced within range for low- to extremely-low income individuals and improving renter protections to reduce risk of eviction. The sections below include an overview of the strategy for achieving desired goals, supporting evidence, core metrics that help measure performance toward goals, and a curated list of resources to support collecting, reporting on, and using data for decision-making.

What

Dimensions of Impact: WHAT

Investors interested in deploying this strategy should consider the scale of the addressable problem, what positive outcomes might be, and how important the change would be to the people (or planet) experiencing it.

Key questions in this dimension include:

What is the problem the investment is trying to address? For the people experiencing the problem, how important is this change?

Beyond the physical and mental health benefits that affordable housing can provide to tenants relative to homelessness or living in a shelter, affordable housing makes additional resources available after rent and utilities are paid (5). Cost-burdened households are often forced to choose between paying rent and paying for other critical resources like healthcare, food, clothing, and education. In many U.S. states, average rent costs correlate to increased food insecurity rates among families with children (3). Even families paying more than 30% of their income to rent units in affordable housing developments often have more money and time to spend on food, healthcare, and education than those living in market-rate units (5). For any population spending more than half of income on housing-related expenses instead of spending on healthcare, education, or wealth-building, the outcomes associated with this investment strategy are important. Investments following this strategy can address this issue by:

  • making available more affordable housing units priced within range of 30% of income for low-, very-low, and extremely-low-income individuals;
  • improving renter protections, rental pricing, and sometimes payment flexibility to reduce the risk of eviction, which can have many significant negative impacts on individuals and families; and
  • contributing, through these factors combined, to stronger family and community heath and resilience, healthier child development, improved educational and employment outcomes, improved standard of living, reduced government spending, reduced rates of homelessness, and an improved local economy.

What is the scale of the problem?

Taking 30% of income as a standard for housing affordability, the number of cost-burdened U.S. households overall has been estimated around 39 million (6). This number includes about 48% of renters. For examples, in the U.S. alone more than 19 million households spend more than half their income on housing costs (7). In England, 1.8 million households are on the housing waiting list, an increase of more than 80% since 1997 (8). The social costs of inadequate housing supply also contribute to financial costs (e.g., to government agencies) associated with emergency shelters (for homeless people), healthcare, and education. Average costs associated with first-time homelessness can reach $20,000 per family (9).  

Who

Dimensions of Impact: WHO

Investors interested in deploying this strategy should consider whom they want to target, as almost every strategy has a host of potential beneficiaries. While some investors may target women of color living in a particular rural area, others may set targets more broadly, e.g., women. Investors interested in targeting particular populations should focus on strategies that have been shown to benefit those populations.

Key questions in this dimension include:

Who/What is helped through this strategy?

Any individual spending more than 30% of their income on housing is considered cost-burdened and may struggle to pay for healthcare, education, food, and clothing. This strategy can target any cost-burdened individual.

Extremely-Low-Income, Very-Low-Income, and Low-Income Individuals: In Australia, lower income renters paid an average of 34% of their gross weekly income on housing (13). Of a total of more than 19 million insecure U.S. households, 63% have extremely low income, 26% have very low income, and 12% have low income (11). Individuals and families in these categories are especially vulnerable to housing instability. In any country where housing payments are expensive, lower income groups are most significantly impacted and, therefore, can be particularly helped by this strategy.

Families with Children: There are significant short- and long-term social costs of children aged 0 to 9 having limited access to healthcare, education, or food. In Australia, an estimated 12% of the homeless population is comprised of children under the age of 12 (14). In the U.S., 1.6 million children were homeless annually between 2006 and 2010, and an estimated 30,000 children were homeless in France in 2012 (2, 14).

Families New to Affordable Housing: Families are often among the most cost-burdened of affordable housing residents and often especially benefit from the additional income made possible by affordable housing. Research shows that children from low-income households that receive subsidies are more likely to have adequate access to food, maintain healthy weights, and be classified as being in good health (3).

Single-Parent Households: Single-parent households (most commonly headed by women) are often the most cost-burdened families and can benefit significantly from the additional income made available by affordable housing (2).

Formerly Homeless Individuals: While homeless populations often need particular assistance in finding housing (see the Reduced Homelessness strategy), they may also struggle after finding housing. A lack of social and financial safety net makes additional costs for food, retaining employment, transport, and medical care particularly challenging for some formerly homeless individuals. These individuals stand to acutely benefit from increased resources available after housing payments.

What are the geographic attributes of those who benefit?

This issue impacts all developed market countries to differing degrees. While most affordable housing investments are made in urban areas, disparities in resources available after housing costs are especially significant in rural areas, likely because of the costs of travel and access. While the problem may be more acute for rural households, the scale of the problem is much more significant in urban areas. For example, in the U.S., 77% of the homeless population resides in rural areas where affordable housing can be difficult to find (4). 

Contribution

Dimensions of Impact: CONTRIBUTION

Investors considering investing in a company or portfolio aligned with this strategy should consider whether the effect they want to have compares to what is likely to happen anyway. Is the investment's contribution ‘likely better’ or ‘likely worse’ than what is likely to occur anyway across What, How much and Who?

Key questions in this dimension include:

Is the investment’s contribution ‘likely better’ or ‘likely worse’ than what is likely to occur anyway across What, How Much and Who?

The extent to which this strategy can increase families’ available resources depends on the affordable housing project and the cost of the housing brought to market. Housing accessibility requires units that are physically, financially, and intellectually accessible to their intended end beneficiaries. To facilitate access, many investees rely on nonprofit or government case workers to place individuals in their units. When using this strategy, providing housing that does not cost-burden the household is often enough to facilitate the outcomes and impacts listed above. (When calculating the 30% threshold for cost burden, investors should include utility costs in total housing costs.)

How Much

Dimensions of Impact: HOW MUCH

Investors deploying capital into investments aligned with this strategy should think about how significant the investment's effect might be. What is likely to be the change's breadth, depth, and duration?

Key questions in this dimension include:

How many can receive the outcome through this strategy?

The number of individuals who can receive outcomes through this strategy depends on the number of individuals who are housing insecure but do not have adequate access to affordable housing units. Estimates vary by country, but more than 19 million U.S. households spend more than half their income on housing.

How much change can beneficiaries experience through this strategy?

The amount of change for beneficiaries derived from this strategy depends on the housing itself and the extent to which it successfully provides tenants with sustainable housing, freeing their income for expenditure on other essentials and wealth-building. Evaluations of projects in line with this strategy have shown the following results:

  • An industry report found that New York City families living in affordable homes financed by Low-Income Housing Tax Credits had double the discretionary income of their neighbors in high-cost housing, enabling them to buy health insurance, pay down debt, save to pay for education, or buy a home (6).
  • In the U.S., the Low-Income Home Energy Assistance Program (LIHEAP), which helps tenants to reduce their energy costs and provides subsidies for utilities, has been shown to decrease the likelihood of food insecurity (3).
  • A study found that compared to children of similar, waitlisted families, a child living in subsidized housing had a 35% greater chance of being classifed as a “well” child, 28% lower risk of serious underweight, and 19% lower risk of food insecurity (11).

Illustrative Investment

L+M Development Partners and Hornig Capital Partners LLC joined with SBH Health Systems to create an affordable housing development designed to address many of the barriers to healthy living faced by low-income residents in the Bronx. Comprising 314 affordable apartments for low-income or formerly homeless households, the development is located across from SBH’s medical center and includes services ranging from an ambulatory-care center to a kitchen for teaching healthy eating. The apartments feature natural filters, with living plants and trees integrated into the walls, in addition to the buildings’ air filtration system. Retail tenants on the ground floor are not be allowed to sell alcohol or tobacco. The estimated completion date for construction is late 2018 (10). Beyond promoting health through the built environment itself, the subsidized rent, targeted particularly toward formerly homeless individuals, will provide cost savings that households can apply to healthcare, healthy food (to complement cooking classes taught at the center), and wealth-building or saving.

Draw on Evidence

This mapped evidence shows what outcomes and impacts this strategy can have, based on academic and field research.

NESTA: 2
Rental Housing Affordability Dynamics, 1990–2009

Rob Collinson. “Rental Housing Affordability Dynamics, 1990–2009.” U.S. Department of Housing and Urban Development. Cityscape: A Journal of Policy Development and Research • Volume 13, no.2 (2011).

NESTA: 1
The Impacts of Affordable Housing on Education: A Research Summary

Maya Brennan. “The Impacts of Affordable Housing on Education: A Research Summary.” Center for Housing Policy Insights, May 2011.

NESTA: 1
Does Housing Matter for Poor Families? A Critical Summary of Research and Issues Still To Be Resolved

Sandra J. Newman. “Does Housing Matter for Poor Families? A Critical Summary of Research and Issues Still To Be Resolved.“ Journal of Policy Analysis and Management 27, no. 4 (2008): 895-925.

NESTA: 2
What Do People Buy When They Don’t Buy Health Insurance and What Does That Say About Why They Are Uninsured?

Helen Levy, and Thomas DeLeire. “What Do People Buy When They Don’t Buy Health Insurance and What Does That Say About Why They Are Uninsured.” National Bureau of Economic Research, no. 9826 (2003).

NESTA: 2
Housing Affordability and Children’s Well-Being: Evidence from the National Survey of America’s Families.

Joseph Harkness and Sandra J. Newman. “Housing Affordability and Children’s Well-Being: Evidence from the National Survey of America’s Families.“ Housing Policy Debate16, no. 2 (2005): 223-255.

NESTA: 1
Housing's and Neighborhoods' Role in Shaping Children's Future

Office of Policy Development and Research (PD&R), U.S. Department of Housing and Urban Development. “Evidence Matters:Housing’s and Neighborhoods’ Role in Shaping Children’s Future.” (2014).

NESTA: 2
The Link Between Housing, Neighborhood, and Mental Health

Earle Chambers, Damaris Fuster, Shakira Suglia, and Emily Rosenbaum. “The Link between Housing, Neighborhood, and Mental Health.” How Housing Matters Policy Research Brief. MacArthur Foundation.

NESTA: 3
Housing Policy Is School Policy: Economically Integrative Housing Promotes Academic Success in Montgomery County, Maryland

Heather Schwartz. Housing Policy is School Policy: Economically Integrative Housing Promotes Academic Success in Montgomery County, Maryland. Century Foundation, 2010.

NESTA: 2
Housing Affordability and Investments in Children

Sandra J. Newman and C. Scott Holupka. “Housing Affordability and Investments in Children.“ Journal of Housing Economics 24 (2014): 89-100.

NESTA: 1
The Well-Being of Low-Income Children: Does Affordable Housing Matter?

Sandra J. Newman. “The Well-Being of Low-Income Children: Does Affordable Housing Matter?” Center for Housing Policy Insights.

NESTA: 2
Family Expenditures Supporting Children Across Income and Urbanicity Strata

Rebekah Levine Coley, Jacqueline Sims, and Elizabeth Votruba-Drzal. “Family Expenditures Supporting Children Across Income and Urbanicity Strata.” Children and Youth Services Review 70 (2016): 129-142.

NESTA: 1
Linking Public Housing Revitalization to Neighborhood School Improvement.

Martin D. Abravanel, Robin E. Smith, and Elizabeth C. Cove. “Linking Public Housing Revitalization to Neighborhood School Improvement.” (2006).

NESTA: 1
Something’s Gotta Give: Working Families and the Cost of Housing

Lipman, Barbara J. “Something’s Gotta Give: Working Families and the Cost of Housing.” (2005). Center for Housing Policy Leadership. New Century Housing Volume 5, Issue 2.

NESTA: 1
Housing as a Platform for Improving Outcomes for Older Renters

Spillman, Brenda C., Jennifer Biess, and Graham MacDonald. Housing as a Platform for Improving Outcomes for Older Renters. Washington, DC: Urban Institute, 2012.

Each resource is assigned a rating of rigor according to the NESTA Standards of Evidence.

Define Metrics

Core Metrics

This starter set of core metrics — chosen from the IRIS catalog with the input of impact investors who work in this area — indicate performance toward objectives within this strategy. They can help with setting targets, tracking performance, and managing toward success.

Additional Metrics

While the above core metrics provide a starter set of measurements that can show outcomes of a portfolio targeted toward this goal, the additional metrics below — or others from the IRIS catalog — can provide more nuance and depth to understanding your impact.