What Is Mixed-Income Housing and What Are the Benefits of Investing?

Integrating people of various income brackets into shared communities is becoming a more common occurrence in small, rural towns as well as in suburbs and large metropolitan areas. Many industry analysts see mixed-income housing as a way to garner social and economic advantages for residents, property owners, communities, and entire neighborhoods.

In order to understand some of the benefits of investing in mixed-income housing, it’s vital to learn what mixed-income housing is, what its limitations are, and why many areas are promoting these developments.

What Is Mixed-Income Housing?

Mixed-income developments are those that offer residency to potential tenants across a wide range of income levels. These residential settings are made affordable to renters classified as “low income” and to those who are not.

The affordable housing units can be in the same building, the same hallway, or the same development. They can be on the same floors or in different buildings altogether. Any arrangement that includes a diverse housing stock that is affordable to renters of many income levels can be deemed as mixed-income housing.

The range of income levels that make up units in this type of development varies; some may even use subsidy programs to reach the lowest-income residents in an area.

What Are Some Benefits of Investing in Mixed-Income Housing?

There are several social benefits and a few great economic benefits for those considering purchasing this type of housing.

Social Benefits

The social goals of an area can influence the mix of incomes of a development. For example, if a goal is to preserve social networks among current residents and prevent displacement, more affordable units might be desired.

Some commonly cited social benefits and goals pertaining to mixed-income housing include economic mobility and community revitalization. For example, having more high-income units can meet the goal of better maintenance and upkeep, a benefit for residents as well as property owners.

Some proponents of this type of housing see mixed-income developments as a way to create well-maintained housing options for everyone, especially those with lower incomes. They also see it as a way to preserve economic integration and even increase the acceptance of affordable housing amongst community members.

It should be noted that research does not support the theory that mixed-income housing results in stronger social connections between those who are at the higher-level income tiers and those at the lower tiers. The research shows that no substantial changes in the economic statuses of families in these units take place, either.

In addition to those previously stated, other social benefits of investing in mixed-income housing include:

  • It can promote economic diversity
  • It can attract further investments
  • It can potentially lower crime rates
  • It provides better access to schools and safety for low-income residents
  • It can sustain housing for the lowest-income households

Mixed-income developments have been associated with substantial decreases in violent crime rates, a reduction in environmental hazards, and other significant positive changes in neighborhoods. A mixture of income levels reduces social pathology caused by the concentration of low-income multifamily projects.

Economic Benefits

The economic benefits of investing in mixed-income developments deserve mention. This type of housing can address what is known as the “culture of poverty”; a concentration of poor households causes problems such as welfare dependency, drug abuse, and joblessness.

According to the U.S. Department of Housing and Urban Development (HUD), low-income residents of mixed-income properties will have access to better jobs, enabling them to move their families past their current economic situations.

Investing in Mixed-Income Developments

Investing in mixed-income housing is a relatively low-risk venture that can provide a steady rate of return on investments. Investors will find that investing in mixed-income developments is a niche business; it’s not suitable for everyone. However, the fact that it is a niche business means it can be quite profitable, too.

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