Do LIHTC Properties’ Positive Spillover Price Effects Result in Lower Nearby Market Rents?

• In Event: Kaleidoscope of Impacts on Urban Rental Markets: Arrivals of High-Profile Firms, LIHTC, Filtering, and Natural Disasters

Abstract

A growing body of research has documented neutral to positive effects of Low-Income Housing Tax Credit (LIHTC) developments on surrounding single-family property values, helping to counter longstanding concerns about potential neighborhood decline. More recent studies further suggest that these positive spillover effects—particularly in lower-income neighborhoods—are not only persistent but may also be additive when multiple LIHTC developments are introduced in close proximity. While such appreciation in property values can signal neighborhood revitalization, it may also generate unintended consequences for renters if landlords respond to rising asset values by increasing rents. This potential tension is especially important given that most LIHTC developments are located in economically distressed communities where a large share of residents are renters with limited financial flexibility. In such contexts, increases in market rents could paradoxically exacerbate housing cost burdens for the very populations that affordable housing programs are intended to support. Despite these concerns, relatively little empirical research has directly examined the effects of LIHTC developments on nearby rental markets. Existing studies have instead focused primarily on the spillover effects of new market-rate multifamily developments. To address this gap, this study investigates the impact of newly placed-in-service LIHTC developments on nearby market-rate multifamily rents. We employ a hybrid empirical strategy that combines an interrupted time series framework with a difference-in-differences design to isolate causal effects. Our analysis uses overlapping property-level and market data from CoStar, CoreLogic, Yardi Matrix, and RentHub, spanning the period from 2000 to 2025. The dataset covers six major metropolitan areas in the state of Florida: Miami-Dade, Fort Lauderdale-Broward, West Palm Beach, Tampa–St. Petersburg, Orlando, and Jacksonville. Importantly, the study period captures both pre- and post-COVID-19 housing market dynamics, allowing us to assess whether LIHTC spillover effects differ across distinct market conditions. While Florida is not fully representative of all U.S. housing markets, it provides a particularly informative case due to the sharp increases in home prices and rents observed since the onset of the pandemic. In addition to analyzing rental price effects, we examine how LIHTC developments influence surrounding single-family and multifamily property values. By comparing these outcomes, the study identifies differential impacts across housing tenures and market segments. Overall, our findings will provide a more comprehensive understanding of how affordable housing investments interact with local rental markets, offering important insights for policymakers seeking to balance neighborhood revitalization with housing affordability.

Author

• Richard Voith, Econsult Solutions Inc
  Presenting Author