CORRECTED: Why affordable housing is great dollar for dollar investment for the state

Monday, December 18, 2023

(Originally Published: December 4, 2023)

California's Experts on Affordable

Housing Finance, Advocacy & Policy

Why affordable housing is a great dollar for dollar investment for the state

Note from President and CEO Matt Schwartz: The Partnership strives hard to be 100% accurate in the data we present. In the case of Mark Stivers original blog on this topic that we published on December 4, 2023, we made a methodological error, thankfully caught by an attentive reader. The revised blog below corrects this error and yet does not take away from the original point that state investment in affordable housing is smart and cost-efficient. [1]

The 2022 Statewide Housing Plan finds that California needs to construct more than one million new homes affordable to lower-income families by 2030 to meet the need. While this may sound like an expensive proposition in today’s high construction cost environment, the reality is that each state dollar invested in producing affordable rental housing leverages private, federal, and local funding at a ratio of more than four to one. In other words, the state’s contribution is less than 20% of the aggregate investment in affordable housing, or $104,220 per affordable home in 2022, according to new research from the California Housing Partnership.

Moreover, given that on average a three-person family occupies each affordable home each year over the 55-year lifetime of the development, this works out to be a cost to the state of only $631 per person per year to house a low-income person. Compare that to the cost of providing hotel/motel rooms to unhoused persons during the pandemic of $117 per day or San Francisco’s estimated cost to house a person in a shelter of $58,400 to $70,800 per year.[2,3]

By any definition, $631 per person per year to affordably house people who are low-income trying to survive in California’s astronomically priced housing market is a bargain worthy of additional state investment. That’s why the Partnership is so excited to support Assembly Bill 1657 by Assemblywoman Buffy Wicks to place a $10 billion affordable housing bond on the November 2024 ballot.

Mark Stivers

Director of Legislative & Regulatory Advocacy

California Housing Partnership

[1] Corrected methodology: On average 11 families live in each affordable home over the life of the 55-year regulatory agreement and each family averages three members during each year. Our per person/per year housing cost has been corrected to reflect annual number of occupants (3) as its basis, as opposed to the lifetime number of occupants (33) erroneously used in our prior analysis.

[2]https://en.wikipedia.org/wiki/Project_Roomkey#:~:text=On%20March%201%2C%201672%20rooms,lower%20than%20the%20cumulative%20totals

[3] https://www.sfexaminer.com/news/what-should-solving-sfs-unsheltered-homelessness-cost/article_3431cdcc-ae44-11ed-814f-e7827eb49891.html

To learn more about the insights contained in this post contact Mark Stivers ([email protected]).

About the California Housing Partnership

The California Housing Partnership creates and preserves affordable and sustainable homes for Californians with low incomes by providing expert financial and policy solutions to nonprofit and public partners. Since 1988, the Partnership's on-the-ground technical assistance, applied research, and legislative leadership has leveraged $34 billion in private and public financing to preserve and create more than 90,000 affordable homes. | chpc.net

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