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.
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:
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).
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.
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).
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.)
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.
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:
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.
National Alliance to End Homelessness. “State of Homelessness Report.” https://endhomelessness.org/homelessness-in-america/homelessness-statistics/state-of-homelessness-report/
Marci McCoy-Roth, Bonnie B. Mackintosh, and David Murphey. “When the Bough Breaks: The Effects of Homelessness on Young Children.” Child Trends: Early Childhood Highlights 3, no. 1 (February 2012): 1–11. https://www.childtrends.org/wp-content/uploads/2012/02/2012-08EffectHomelessnessChildren.pdf
Center for Housing Policy. “The Impacts of Affordable Housing on Health: A Research Summary.” http://www.homelesshub.ca/resource/impacts-affordable-housing-health-research-summary-0
National Alliance to End Homelessness. “State of Homelessness Report.” https://endhomelessness.org/homelessness-in-america/homelessness-statistics/state-of-homelessness-report/
Flynann Janisse. “Affordable Housing, Health Care Are Inextricably Linked.” Novogradac Journal of Tax Credits 7, no. 7 (July 2016). http://rainbowhousing.org/wp-content/uploads/2016/04/novogradac_jtc_2016-07_lihtc_pg16.pdf
Joint Center for Housing Studies. The State of the Nation’s Housing. Cambridge, MA: Harvard University, 2017. http://www.jchs.harvard.edu/research/state_nations_housing
“The Cost of Affordable Housing: Does It Pencil Out?” Web feature. Updated July 2016. Urban Institute. http://apps.urban.org/features/cost-of-affordable-housing/
“Improving Social Housing.” Shelter: The Housing and Homelessness Charity. http://england.shelter.org.uk/campaigns_/why_we_campaign/Improving_social_housing
Brooke Spellman, Jill Khadduri, Brian Sokol, and Josh Leopold. Costs Associated with First-Time Homelessness for Families and Individuals. Washington, DC: U.S. Department of Housing and Urban Development, March 2010. https://www.huduser.gov/publications/pdf/Costs_Homeless.pdf
Keiko Morris. “Bronx Project Sees Health in Affordable Housing.” Wall Street Journal. July 10, 2016. https://www.wsj.com/articles/bronx-project-sees-health-in-affordable-housing-1468193372
John T. Cook, Stephanie Ettinger de Cuba, JoHanna Flacks, Deborah A. Frank, Annie Gayman, Elizabeth L. March, Alan F. Meyers, Samantha Morton, and Megan Sandel. “Rx for Hunger: Affordable Housing.” https://www.issuelab.org/resource/rx-for-hunger-affordable-housing.html
Enterprise. “Why Are People Across the U.S. Struggling to Afford A Decent Place to Call Home?” Online resource. http://www.housinginsecurity.org/
Australian Bureau of Statistics. “4130.0 – Housing Occupancy and Costs, 2013-14.” (2014.) http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/4130.0~2013-14~Main%20Features~Housing%20Costs%20and%20Affordability~5
Global Homelessness Statistics. Homeless World Cup Foundation. ”$”:https://www.homelessworldcup.org/homelessness-statistics/
This mapped evidence shows what outcomes and impacts this strategy can have, based on academic and field research.
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).
Maya Brennan. “The Impacts of Affordable Housing on Education: A Research Summary.” Center for Housing Policy Insights, May 2011.
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.
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).
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.
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).
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.
Heather Schwartz. Housing Policy is School Policy: Economically Integrative Housing Promotes Academic Success in Montgomery County, Maryland. Century Foundation, 2010.
Sandra J. Newman and C. Scott Holupka. “Housing Affordability and Investments in Children.“ Journal of Housing Economics 24 (2014): 89-100.
Sandra J. Newman. “The Well-Being of Low-Income Children: Does Affordable Housing Matter?” Center for Housing Policy Insights.
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.
Martin D. Abravanel, Robin E. Smith, and Elizabeth C. Cove. “Linking Public Housing Revitalization to Neighborhood School Improvement.” (2006).
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.
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.
Number of housing units constructed as a result of investment by the organization during the reporting period.
Organizations should footnote all assumptions that went into calculating or counting new units, as well as the sources of their data.
The total number of new units constructed should be easily accessible from the developer or architect of the project. Depending on the nature of the investment vehicle, mandated reporting against this metric by the project developer may merit inclusion in a terms sheet to guarantee high-quality, timely data. Organizations should count new units as complete at the conclusion of their construction—meaning at the point when they could reasonably be occupied.
This metric is essential to understand the scale of potential impact delivered by the investment. New units of housing are necessary in order to deliver on outcomes related to the affordable occupancy of these units.
Number of housing units rehabilitated or preserved as a result of investment by the organization during the reporting period.
Organizations should footnote all assumptions that went into calculating or counting preserved or rehabilitated units, as well as the sources of their data.
The total number of rehabilitated/preserved affordable housing units should be easily accessible from the project developer or management company. Depending on the nature of the investment vehicle, reporting against this metric by the project developer or management company may merit inclusion in a terms sheet to guarantee high-quality, timely data.
Like the number of units of affordable housing, this metric is essential to understand the scale of the potential impact delivered by the investment. Preservation and rehabilitation of new units are necessary in order to deliver on outcomes related to the affordable occupancy of these units.
Number of individuals housed or projected to be housed in single-family or multi-family dwellings as a result of new construction, loans, repairs, or remodeling resulting from investments made by the organization during the reporting period.
Organizations should footnote whether they are reporting on the number of individuals housed or the number of individuals projected to be housed. For reasons related to the structure of the investment vehicle, organizations may prefer and choose either. Organizations should also footnote the source of the data.
These data should be available at an individual investee level; if not, it can sometimes be found from public sources (depending on source of funding for the housing development). Household-level data per decade are also available in the United States via the Census.
This metric captures the number of individuals who are provided housing in this unit. Measuring against this metric helps to articulate the performance of the product (housing, in this case). Constructed/preserved units are useful as a means of delivering impact only insofar as they are occupied. Ideally, this metric can also be understood alongside potential individuals housed by a project as a means to understand occupancy rate.
Percentage of a household’s income that is spent on rent/mortgage and utilities (including heat, water, electricity, and cooling).
Spending on Rent, Mortgage, and Utilities / Total Household Income
Organizations should footnote the source of their data, as well as any assumptions used in calculating total income and spending on rent/utilities.
Unless a management company requires their tenants to regularly report their income (not common), this metric is often based on the income recorded for the threshold requirement at the time of application for occupancy. Spending on rent/mortgage and utilities should be accessible to the management company.
This metric indicates the extent to which the household is cost-burdened by their rent/mortgage. Compare to the 30% suggested baseline spending on rent/mortgage and utilities for the U.S., or similar threshhold codified in the country of investment.
Average cost savings per client obtained by renting or purchasing an affordable unit compared to the average price that client would otherwise pay for a unit during the reporting period.
Average cost of market-rate unit per individual ? Average cost of affordable unit per individual
Organizations should footnote the source of their data, as well as any assumptions used in calculating the cost of the market rate and affordable units.
This metric relies on assumptions for the average cost per client for affordable and market-rate housing. When calculating the market-rate alternative, organizations should use an average from the surrounding area that they deem appropriate, footnoting assumptions. Cost of affordable housing per unit can most often be accessed through the management company.
This metric indicates the savings the tenant of affordable housing enjoys as a function of the affordable housing (relative to occupying a market-rate alternative). This is cost savings that can be applied to spending on healthcare, education, long-term wealth-building, access to fresh healthy food, etc.
Number of formerly homeless individuals housed in single- or multi-family dwellings as a result of new construction, loans, repairs, or remodeling resulting from investments made by the organization during the reporting period.
Organizations should footnote the source of their data, as well as any assumptions that went into calculating this metric.
This metric is intended to capture either a) the number of formerly homeless families provided affordable housing as a result of the investment, or b) the number of formerly homeless individuals provided affordable housing as a result of the investment. Investors should footnote whether they choose to measure at a family or an individual level. Organizations may also want to report this metric alongside the total number of individuals or families housed as a means to understand what proportion of their investee’s residents were formerly homeless. Collection of these data likely relies on a long-term relationship with the investee. A short-term debt investor may find it challenging to capture this metric.
This metric indicates the level of success at providing housing for homeless individuals. If the strategy selected by the investor relies on converting homeless individuals to housed individuals, this is a key performance indicator.
Number of formerly incarcerated individuals housed in single- or multi-family dwellings as a result of new construction, loans, repairs, or remodeling resulting from investments made by the organization during the reporting period.
Organizations should footnote the source of their data, as well as all assumptions used in their calculations.
This metric is intended to capture either a) the number of formerly incarcerated families provided affordable housing as a result of the investment, or b) the number of formerly incarcerated individuals provided affordable housing as a result of the investment. Investors should footnote whether they choose to measure at a family or an individual level. Organizations may also want to report this metric alongside the total number of individuals/families housed as a means of understanding what proportion of their investee’s residents were formerly incarcerated. Collection of these data likely relies on a long-term relationship with the investee. A short-term debt investor may find it challenging to capture this metric.
Investors interested in working to reduce recidivism may choose to capture this metric, which indicates performance toward the outcomes and impacts outlined in the logic model. If the strategy selected by the investor relies on converting incarcerated individuals to affordably housed individuals, this metric is a key performance indicator.
Ratio between the number of tenants involuntarily removed from the housing unit, compared to the total number of permanent tenants during the reporting period.
Organizations should footnote whether the individuals have left their units to shelters or other supportive housing structures.
This metric is intended to capture the ratio between individuals removed from the affordable housing because of their inability to pay rent and utility costs. This data should be collected directly from the management company or building management.
Investors focused on more permanent, stable housing may consider using measurements of eviction. If the eviction rate is high in a particular development, it may indicate a need for investors and management companies to consider how they can better achieve long-term stability to avoid further eviction—possibly through provision of additional or different supportive services. If tenants are evicted after several months in affordable units, the impacts are less likely to be achieved, as stability decreases.
Ratio between the number of tenants departing the housing unit and the average number of permanent tenants during the reporting period.
Organizations should footnote whether the individuals have left their units to other affordable or market-rate housing, or whether their exit is unknown.
This metric is intended to capture the ratio between individuals exiting affordable housing and the total number of individuals housed in all units. These data should be collected directly from the management company or building management.
Investors focused on more permanent, stable housing may consider using measurements of turnover. Turnover rate concerns retention rate and the likelihood of achieving the impacts outlined in the logic model. If tenants are evicted after several months in affordable units or leave voluntarily, the impacts are less likely to be achieved, as stability decreases. However, organizations should consider, to the extent that data are available, to where their tenants exit: if they are moving into other affordable units or, ideally, to market-rate housing, this metric may indicate successful performance.
The types of supportive housing services linked to affordable housing developments as of the end of the reporting period.
Organizations should footnote details of the supportive services, ideally outlining key performance indicators for each.
This qualitative metric is intended to capture the scope of the services offered by the affordable housing development during the reporting period. The type of each supportive service should be collected at the end of each reporting period.
Investors interested in providing resources to support continued housing stability for formerly homeless individuals—e.g., life skills training, mental and physical healthcare centers, alcohol and substance abuse treatment, or vocational programs—may use this metric to track the provision of those services. Supportive services in and of themselves do not indicate performance toward outcomes and impacts. However, this qualitative metric can indicate whether an investee has begun to consider the role that supportive services can play in retaining and advancing beneficiaries of their project.
Number of reports issued to the local police or enforcement office regarding issues of domestic abuse.
Organizations should footnote the type and number of each sort of violation. Organizations should also footnote the source of their data, as well as any assumptions that went into calculating this metric.
This metric is intended to capture the unique number of reports to the police or local enforcement agency from the housing project or development. These data may be challenging to capture. While most management companies will have records of domestic abuse reported on their premises, they may not track or aggregate that data. Data may also be available from the municipality, depending on the location.
Investors focused on reducing homelessness related to domestic violence may choose to track this metric, which is an imperfect indicator of the extent of domestic abuse in a particular area. Comparison to a baseline of domestic abuse in shelters and among homeless populations may also indicate performance toward the goal of reducing domestic abuse.
The number of residential units that are hold third-party certifications as of the end of the reporting period.
Organizations should footnote the certification name, certifying body, and date since the product/service has been certified.
This metric is intended to capture third-party, standards-based, assurance-based certifications. The process of certification should be performed by a recognized body that is independent from interested parties. These data should be collected directly from the housing developer or management company. While these certifications are typically applied to entire developments or facilities, the unit of measure is housing units as a means to understand the scale of the unit alongside the certification. Organizations should, if possible, tie these data to the above metrics to understand the number of individuals or families housed in units with quality certifications.
Investors interested in retrofitting housing units to improve energy efficiency — which can reduce beneficiary energy/utility costs—may choose to measure against these metrics. While certifications are not necessarily the best indicator of ongoing energy efficiency or environmental sustainability, they are easily measurable indicators that can indicate progress toward energy efficient units for tenants.
The percentage of tenant requests for repair/complaints that received satisfactory responses during the reporting period.
Organizations should footnote the types of complaints (or broadly classify types of complaints into tiers) and any assumptions that went into the calculation. Organizations should also footnote how they determine whether or not the request was addressed.factorily.
This metric is intended to capture the percentage of requests from tenants that were met by the landlord or management company in a satisfactory manner. This data should be collected directly from the housing development or management company. While most will have repair logs to track costs and expenditures, some investees may need to develop systems to collect this data.
This metric is an especially good indicator of performance if tracked before and after rehabilitation/renovation of housing units. Generally, responsiveness to tenant requests indicates the housing quality is better, though a growth in the number of requests may indicate that housing stock is depreciating and may need to be renovated or rehabilitated.