In today’s economic landscape, the importance of affordable housing extends far beyond shelter—it is a foundational pillar for sustainable community development, economic mobility, and financial resilience. As finance professionals at Erie Ohio Capital, we regularly analyze the ripple effects of financial policies and investment strategies. Few issues are as interwoven with long-term economic health as housing affordability.
The Economic Case for Affordable Housing
Affordable housing is not just a social imperative; it is a critical economic driver. When families are not overburdened by housing costs, they have more disposable income to spend on education, healthcare, and local businesses. This, in turn, stimulates local economies and supports job growth.
A 2023 report by the National Low Income Housing Coalition (NLIHC) revealed that only 33 affordable and available rental homes exist for every 100 extremely low-income renter households in the U.S. The supply-demand imbalance is acute and growing—especially in urban and suburban markets experiencing population and job growth.
Moreover, a 2015 study by the National Association of Home Builders (NAHB) found that the construction of 100 affordable rental homes can generate approximately 297 jobs, $28 million in local income, and $3.6 million in taxes and revenue for local governments in the first year alone. This economic impact isn’t theoretical—it’s tangible, trackable, and repeatable.
Reducing Financial Strain = Increasing Financial Stability
From a financial perspective, when households are not cost-burdened (i.e., spending more than 30% of their income on housing), they are more likely to maintain healthy credit, save for emergencies, and participate in the broader financial system. A 2021 Pew Research Center report noted that nearly half of renters (49%) said they had trouble paying rent during the pandemic, highlighting how housing instability exacerbates broader financial insecurity.
Affordable housing is also strongly linked to improved financial outcomes over time. A longitudinal study by the MacArthur Foundation found that children in stable, affordable housing are more likely to achieve higher educational outcomes, which correlates with greater earning potential and long-term economic independence.
Community Investment and Risk Mitigation
For financial institutions, supporting affordable housing development isn’t just an act of goodwill—it’s smart risk management. Communities with high housing costs and limited affordability tend to experience higher rates of delinquency, default, and foreclosures. These, in turn, put pressure on public resources and reduce overall economic productivity.
Affordable housing investments—whether through low-income housing tax credits (LIHTCs), community development financial institutions (CDFIs), or public-private partnerships—offer banks opportunities to meet Community Reinvestment Act (CRA) obligations while promoting economic resilience. They also reduce portfolio risk by supporting a healthier, more financially stable borrower base.
Lenders’ Role in Housing Affordability
At Erie Ohio Capital, we believe that strong communities make for a strong economy. That’s why we support affordable housing initiatives through targeted small business lending programs, investment in workforce community development projects, and partnerships with local governments and nonprofit developers.
Though we are proud to do what we do—we’re not alone. According to the Federal Reserve, banks allocated over $19 billion to community development lending in 2022, with a significant portion directed toward affordable housing. These investments yield returns not only in financial terms, but in strengthened communities, increased consumer trust, and long-term economic health.
Conclusion
Affordable housing is a linchpin of community vitality. Its benefits are measurable and profound—from improved individual financial health to broader economic gains. As financial professionals, our responsibility is not only to manage risk and return, but to recognize and invest in the economic foundations that make prosperity possible.
At Erie Ohio Capital, we are committed to building communities where all individuals have the opportunity to thrive—starting with an affordable place to call home.
Sources
National Low Income Housing Coalition, “The Gap: A Shortage of Affordable Homes,” 2023
Pew Research Center, “Financial and Housing Insecurity During the Pandemic,” 2021