Equity Starts at Home: Why Housing Affordability is a Priority for Impact Investing

For decades, housing affordability has been a challenge, and in 2024, higher mortgage rates, insurance pricing, and decades of under-building have caused a localized challenge to become a national crisis. A recent Bankrate report found that “Americans in 22 states and Washington, D.C., needed to earn at least $100,000 annually to afford a median-priced home.”

When families don’t have access to safe, conveniently-located, and affordable housing, it can disrupt their entire financial well-being.Children experience academic disruption; families struggle to save and invest in their future; and jobs become harder to obtain and hold down. 

Unfortunately, it’s also one of the least funded areas of economic opportunity. The Chronicle of Philanthropy reported that housing development and services equated to just 1 percent of domestic grantmaking in recent years. Considering that one in three households is currently “cost-burdened,” or paying more than 33% of their income on housing, the gap is staggering.

At Mission Investors Exchange’s (MIE) 2024 National Conference, member Community Housing Capital hosted a dine-around with funders, housing advocates, and supporters to explore barriers to constructing and preserving affordable housing locally and nationally. The goal was to share strategies and best practices with the MIE audience to help unlock catalytic funding necessary to scale this essential need for U.S. families.

Key takeaways included: 

1. Impact Investors Recognize the Importance of Affordable Housing and are Seeking to Invest at Scale. Investors understand the centrality of housing in building social well-being, educational outcomes, and economic security, and that it’s an issue that cannot be easily solved through “silo,” programmatic investments. Partnerships with community organizations, wrap-around service organizations, financial institutions, and other funders, alongside housing developers, comprise the ingredients for success.
2. Developers Continue to Overcome Challenges in Constructing and Preserving Affordable Housing.  Across the country and every day, organizations, such as those belonging to the national network NeighborWorks America, have decades-long track records of tackling the key barriers to affordable housing. CDFIs, such as Community Housing Capital, are similarly proving an effective conduit for constructing and preserving housing for low-income households.
3. Investing at the Intersection of Racial Equity and Housing Affordability and Scale Requires Intentionality. Out of roughly 112,000 real estate development companies in the United States, around 111,000 of them are white-owned. Funds like the Black, Indigenous, and People of Color Affordable Housing Development Fund, supported in part by Arnold Ventures and Community Housing Capital, invest in under-represented leaders and help historically discriminated-against communities build wealth through homeownership, helping to repair decades of systemic disinvestment.
4. Organizations Utilizing Blended Capital Can Multiply Impact. CDFIs that blend private capital and public funding and re-invest their own returns can achieve more societal returns than those with single sources of funding. In addition, they are incented to monitor risk of their investments while rewarding those that provide wraparound services to their residents, such as childcare, education, transportation, and other services.