Investments in this strategy aim to improve housing quality by increasing energy efficiency, decreasing cost burden, and reducing exposure to airborne pollutants, harmful pests, molds, or harmful chemicals. The sections below include an overview of the strategy for achieving desired goals, supporting evidence, core metrics that help measure performance toward goals, and a curated list of resources to support collecting, reporting on, and using data for decision-making.


Dimensions of Impact: WHAT

Investors interested in deploying this strategy should consider the scale of the addressable problem, what positive outcomes might be, and how important the change would be to the people (or planet) experiencing it.

Key questions in this dimension include:

What problem does the investment aim to address? For the target stakeholders experiencing the problem, how important is this change?

The quality of both affordable and market-rate housing significantly affects the lives and physical and mental health of its tenants. Poorly maintained homes are more likely to have mold, vermin, airborne pollutants, and lead paint—all of which can significantly hinder the development of children and contribute to negative health outcomes in otherwise healthy populations (3). These factors make it more challenging to focus on education or hold a job and contribute to frequent and disruptive moves (see Residential Stability strategy) (4). For any population or individual living in poor-quality housing for whom the quality of their housing impacts their health, educational outcomes, or ability to earn money, the outcomes associated with this investment strategy are likely essential. Investments in this theme can:

  • reduce end beneficiary exposure to airborne pollutants, harmful pests, mold, and harmful chemicals (e.g., lead paint), thereby increasing likelihood of healthy child development and reducing the risk of certain negative health outcomes, including asthma and disease;
  • increase energy efficiency, which can reduce household expenditures on electricity and fuel; and
  • lead to improved physical and mental health, healthier childhood development, reduced government spending, improved standard of living, improved community health, and stronger local economies.

What is the scale of the problem?

Taking 30% of income as a standard for housing affordability, the number of cost-burdened U.S. households overall has been estimated around 39 million (3, 7, 8). This number includes about 48% of renters. In the UK, 43% of homes fail Shelter’s Living Home Standard (5). Researchers at the University of Adelaide reported that an estimated one million Australians are living in poor- to very-poor-quality housing (6).


Dimensions of Impact: WHO

Investors interested in deploying this strategy should consider whom they want to target, as almost every strategy has a host of potential beneficiaries. While some investors may target women of color living in a particular rural area, others may set targets more broadly, e.g., women. Investors interested in targeting particular populations should focus on strategies that have been shown to benefit those populations.

Key questions in this dimension include:

Who (people, planet, or both) is helped through investments aligned with this Strategic Goal?

While any families or individuals with up to 70% of Area Median Income (AMI) may be good targets for access to high-quality affordable housing, this strategy can particularly help several specific groups:

Individuals Living in Poor-Quality Housing: Individuals living in poorly managed, lead-laden, or infested households will benefit more from high-quality housing than individuals already living in good-quality housing.

Individuals and Families Living in Housing that is Crowded or Too Densely Populated: Overcrowded housing contributes to significant mental and physical health challenges for its tenants, including by increasing the spread of disease. In New Zealand hospitals, for example, one in 10 patients are admitted for an infectious disease that could be attributed to crowded housing conditions (1).

Homeless Individuals: Roughly 30% of homeless individuals in the United States live in improvised shelters (e.g., shacks, cars, public areas). While any affordable housing would likely represent an improvement in shelter conditions (especially in temperate regions where the individual has regularly improvised shelter in temperatures below 40°F), placement in quality housing is especially beneficial (2).  

Individuals Living in Temperate Zones: A review of the health effects of housing quality in geographies including Australia, New Zealand, the U.K., and the U.S. noted that the single clearest positive impact on health came from warmth and energy efficiency in housing. Access to housing that was sufficiently warm in the winter months contributed to improvements in general physical, respiratory, and mental health (13).

What are the geographic attributes of those who are affected?

In most developed-market countries, homeless populations live in urban or peri-urban areas. In the U.S., for example, between 4% and 7% of the homeless population (compared to about 15% of the total population) live in rural areas (2). While more homeless individuals are in urban areas, rural areas often have worse-quality housing (2). Because homelessness can be more difficult to identify in rural areas, and because impoverished rural communities rarely have the formal social service networks of their urban counterparts, many end beneficiaries of this investment strategy may live in rural areas.


Dimensions of Impact: CONTRIBUTION

Investors considering investing in a company or portfolio aligned with this strategy should consider whether the effect they want to have compares to what is likely to happen anyway. Is the investment's contribution ‘likely better’ or ‘likely worse’ than what is likely to occur anyway across What, How much and Who?

Key questions in this dimension include:

How can investments in line with this Strategic Goal contribute to outcomes, and are these investments’ effects likely better, worse, or neutral than what would happen otherwise

The extent to which this strategy can address housing quality depends on the housing a specific affordable housing project brings to market. For this strategy, increasing access to housing that is of comparatively better quality than other housing at similar price points would likely make an investment much better than what would occur without it.

How Much

Dimensions of Impact: HOW MUCH

Investors deploying capital into investments aligned with this strategy should think about how significant the investment's effect might be. What is likely to be the change's breadth, depth, and duration?

Key questions in this dimension include:

How many target stakeholders can experience the outcome through investments aligned with this Strategic Goal?

The number of individuals who can receive outcomes through this strategy is limited only by the number of individuals who lack adequate access to quality affordable units. Estimates vary by country and region, but as an example, more than 19 million U.S. households spend more than half of their household income on housing; many of the current housing options for low-, very-low, and extremely-low-income and vulnerable individuals or families are likely of low quality.

How much change can target stakeholders experience through investments aligned with this Strategic Goal?

The amount of change that end beneficiaries can receive through this strategy depends on the housing itself, the extent to which the project succeeds in providing quality housing for tenants, and establishment of housing maintenance procedures consistent with best practices or certifications.

Illustrative Investment

In 2008, 198 units of the 135th Street Green Affordable Housing project in New York’s Harlem neighborhood were purchased by the Rose Smart Growth Investment Fund, including 10 six-story buildings in close proximity to trains and with nearby access to food. Shortly after purchase, with financing from a number of sources, the project was renovated, including all 159,000 square feet of residential property and 4,500 square feet of retail. The LEED-certified Section 8 housing was upgraded with the installation of additional insulation, double pane windows, a 250kw rooftop solar array, and significantly improved indoor air quality (11).

Draw on Evidence

This mapped evidence shows what outcomes and impacts this strategy can have, based on academic and field research.

Household Crowding During Childhood and Long-Term Education Outcomes

Leonard M. Lopoo and Andrew S. London. “Household Crowding During Childhood and Long-Term Education Outcomes.” Demography 53, no. 3 (2016): 699-721.

High-Quality Affordable Housing Impacts Health

R. Cohen. “The Positive Impacts of Affordable Housing on Health: A Research Summary.” Washington, DC: Centre for Housing Policy. (2009).

The Built Environment and Children's Health

Susan Kay Cummins and Richard Joseph Jackson. “The Built Environment and Children’s Health.” Pediatric Clinics of North America 48, no. 5 (2001): 1241-1252.

Dwelling Disparities: How Poor Housing Leads to Poor Health

Hood, Ernie. “Dwelling Disparities: How Poor Housing Leads to Poor Health.” Environmental Health Perspectives 113, no. 5 (2005): A310.

Health-Related Disparities: Iinfluence of Environmental Factors

Olden, Kenneth, and Sandra L. White. “Health-Related Disparities: Iinfluence of Environmental Factors.” Medical Clinics 89, no. 4 (2005): 721-738.

Preserving Safe, High Quality Public Housing Should Be a Priority of Federal Housing Policy

Sard, Barbara, and Will Fischer. “Preserving Safe, High Quality Public Housing Should Be A Priority of Federal Housing Policy.” Center on Budget and Policy Priorities 1 (2008): 36.

Housing's Economic and Social Impacts

MacDonald, Heather, Richard Funderburg, David Swenson, Anne Russett, and Malynne Simeon. “Housing’s Economic and Social Impacts.” (2007).

Housing Affordability and Health Among Homeowners and Renters

Pollack, Craig Evan, Beth Ann Griffin, and Julia Lynch. “Housing Afordability and Health Among Homeowners and Renters.” American Journal of Preventive Medicine 39, no. 6 (2010): 515-521.

Housing as a Health Care Investment

Sandel, M., J. Cook, and A. Poblacion. “Housing as a Health Care Investment: Affordable Housing Supports Children’s Health.” Insights from Housing Policy Research (2016).

Where We Live Matters for Our Health: The Links Between Housing and Health

Braveman, Paula, Mercedes Dekker, Susan Egerter, Craig Pollack, and Tabashir Sadegh-Nobari. “Where We Live Matters for Our Health: The Links Between Housing and Health.” (2008).

Subsidized Housing and Neighborhood Impacts: A Theoretical Discussion and Review of the Evidence

Freeman, Lance, and Hilary Botein. “Subsidized Housing and Neighborhood Impacts: A Theoretical Discussion and Review of the Evidence.” CPL Bibliography 16, no. 3 (2002): 359-378.

Each resource is assigned a rating of rigor according to the NESTA Standards of Evidence.

Define Metrics

Core Metrics

This starter set of core metrics — chosen from the IRIS catalog with the input of impact investors who work in this area — indicate performance toward objectives within this strategy. They can help with setting targets, tracking performance, and managing toward success.

Additional Metrics

While the above core metrics provide a starter set of measurements that can show outcomes of a portfolio targeted toward this goal, the additional metrics below — or others from the IRIS catalog — can provide more nuance and depth to understanding your impact.