The high cost of housing is one of the most pressing challenges facing low- and moderate-income households today. More than half of households earning less than $30,000 per year spend over half their income on rent, forcing painful tradeoffs and leaving little for other basic necessities such as food, medical care, and transportation. 1 Further, overheated markets lead families to sacrifice safer, more resource-rich neighborhoods for cheaper housing. Conversely, research shows that safe, decent affordable housing in resource-rich neighborhoods not only relieves financial pressure, reduces stress, improves health and creates a platform for other social investments to take root.
LIIF calculates the social value of affordable housing in numerous ways. Here, we focus on income boosts generated by LIIF-supported affordable housing projects—a measure that directly responds to our mission of poverty alleviation. 2 We calculate the boost in discretionary income generated by housing affordability as the difference between market and affordable rents of the properties we finance. We assume that this impact holds for the project’s affordability restriction period, assuming a 3 percent annual growth rate in this period to correspond with inflation and rising costs of living.
For more detail on the literature and assumptions for this calculation, download the full methodology documentation
1 Joint Center for Housing Studies of Harvard University. 2013. “The State of the Nation’s Housing 2013.” JCHS tabulations of US Census Bureau, American Community Surveys.
2 Although income boosts translate to economic spillover effects on the local and regional economy, we do not track these impacts because they are less directly relevant to our mission.