We are all aware that having access to affordable, quality housing in a safe neighborhood that is connected to jobs and other amenities makes life better for people.  Research has shown the positive relationship between stable, affordable housing and good health outcomes, improved academic performance and greater economic self-sufficiency. Individuals and families with low-incomes who have access to housing that is affordable undoubtedly benefit from that housing.  For some, that is reason enough to support public spending on affordable housing programs. But what about others who ask about the return on investment in affordable housing? To what extent should we make the economic case for affordable housing?

Putting a dollar value on the benefits associated with access to affordable housing is a tricky business.  Housing researchers have tended to avoid monetizing benefits—and for good reasons. It can be really difficult to establish definitively that receipt of housing assistance causes a change in an individual’s or family’s condition.  Even if that link could be shown, the benefits might be a long time coming and it can be hard to track people and measure changes over years or even decades.  Some housing advocates also balk at putting a dollar value on the benefits of housing, arguing that housing is a right and economic benefits need not be part of the discussion.

There is a little research, however, that has put a dollar value on the benefits of affordable housing. Monetizing the health benefits associated with housing is probably the most common way return on investment has been measured.  In a review of the research on the intersection of housing and health, Janet Viveiros and I found a number of rigorous studies that have demonstrated that providing permanent supportive housing to homeless individuals saves money on public health care expenditures. In fact, it can be far more cost effective to provide housing to homeless individuals than to provide the extra health care and other services they need when they are not stably housed.

Aside from the permanent supportive housing research, there is little analysis on the public benefits of other affordable housing programs.  One exception is recent research by Raj Chetty and his collaborators at Harvard. They analyzed data from the Moving to Opportunity (MTO) housing voucher program and found that children in families that had access to a voucher under this program had higher incomes later in life.  And, over the long term, the additional tax revenue collected on these increased earnings were more than enough to offset the cost of the voucher program. So, investing in this housing voucher program had a positive return—albeit, many years after the fact.

How does investing in affordable housing relate to regional economic growth? Although I’ve made the claim in the past that a lack of affordable housing can lead to slower economic growth, there hasn’t been any systematic research that definitely confirms that hypothesis.  There is, however, new and compelling research that hints at the important role housing plays in regional prosperity.  Researchers Chris Benner and Manuel Pastor examined economic growth in metro areas across the U.S. and found that places with higher inequality and more segregation have slower job growth and less sustainable economic development. By extension, local and regional housing policies that lead to less inequality and more residential integration should lead to stronger regional economies. And theoretically one could monetize the value to the regional economy of pursuing those types of inclusive housing policies.

So, there is a lot of potential for quantifying the broad economic benefits of affordable housing programs and policies.  But for now, researchers have tended not to focus on measuring the return on investment of public spending on housing. It seems like we could do a better job on this. Even as we realize that a “cost-benefit” or “return-on-investment” analysis should not be the sole driver of housing policy decisions, it can be a useful part of the discussion.  And it can help make the case for affordable housing programs to those who take a “bottom line” approach to government spending decisions.