Affordable housing is a long-term asset that helps families and children thrive. According to a How Housing Matters survey, 70% of Americans agree that “investing in affordable, quality housing is investing in kids and their future.”
Increasing the supply of affordable housing and rental assistance—especially in areas connected to good schools, well-paying jobs, healthcare, and transportation—helps families climb the economic ladder and leads to greater community development. In addition, children who live in a stable, affordable home have better health and educational outcomes, have greater access to economic opportunities, enjoy better mental and physical well-being, and benefit from stronger communities. Research shows that increasing access to affordable housing is the most cost-effective strategy for reducing childhood poverty in the United States.
Groundbreaking research by Harvard Economist Raj Chetty offers persuasive evidence on the impact of affordable housing on upward mobility for children. Using new tax data, Chetty and his colleagues assessed the long-term outcomes for children who moved at a younger age to lower poverty neighborhoods. Chetty’s study found that children who were younger than 13 when their family moved to lower poverty neighborhoods saw adult earnings increase by approximately 31%, an increased likelihood of living in better neighborhoods as adults, and a lowered likelihood of becoming a single parent.
Other research shows that children living in stable, affordable homes are more likely to thrive in school and have greater opportunities to learn inside and outside the classroom. Children in low-income households that live in affordable housing score better on cognitive development tests than those in households with unaffordable rents. Researchers suggest that that is partly because parents with affordable housing can invest more in activities and materials that support their children’s development.
Having access to affordable housing allows the lowest income families to devote more of their limited resources to other basic needs. Families paying large shares of their income for rent have less money to spend on food, health care, and other necessities than those with affordable rents.
Beyond the broad benefits to children and families, an investment in affordable housing for the lowest-income households bolsters productivity and economic growth. By connecting workers to communities with well-paying jobs, good schools, and transit, investments in affordable housing spurs local job creation and increase incomes. Investments in affordable housing boost local economies and contribute to neighborhood and community development.
Research shows that the shortage of affordable housing in major metropolitan areas costs the American economy about $2 trillion a year in lower wages and productivity. The lack of affordable housing acts prevents lower-income households from moving to communities with more economic opportunities.
As a result, families have constrained opportunities to increase earnings, causing slower GDP growth. In fact, researchers estimate that the growth in GDP between 1964 and 2009 would have been 13.5% higher if families had better access to affordable housing. This would have led to a $1.7 trillion increase in total income or $8,775 in additional wages per worker.
Moreover, each dollar invested in affordable housing infrastructure boosts local economies by leveraging public and private resources to generate income—including resident earnings and additional local tax revenue—and support job creation and retention. In fact, building 100 affordable rental homes generates $11.7 million in local income, $2.2 million in taxes and other revenue for local governments, and 161 local jobs in the first year.
In City and Metropolitan Inequality on the Rise, Driven by Declining Incomes, a 2016 report by the Brookings Institution, researchers examined the relationship between income inequality and housing affordability.
In addition to finding that income inequality in the United States is higher than before the Great Recession, the authors found that housing is less affordable for low-income households in cities with higher levels of inequality. Their findings also suggest that housing markets in cities with high inequality are more responsive to the demand for rental housing for higher income households and less responsive to the demand for housing affordable to lower income households.
People of color are disproportionately impacted by the housing affordability crisis. Households of color and foreign-born households account for half of renter households. Over the next decade, people of color will contribute virtually all of the net increase in renters, with Hispanics alone accounting for more than half of the total.
By investing in affordable homes for the lowest income people, our nation can lift up families with the greatest needs, help close the gap between rich and poor and level the playing field for families of color.