Across the country, there are about 5.5 million apartment units known as naturally occurring affordable housing (NOAH), according to real estate data firm CoStar. These units represent 36.2 percent of the apartment housing market.
NOAH apartment communities don’t receive government subsidies or tax credits and are generally older buildings without amenities. CoStar found that 75.4 percent of all apartment communities can be classified as NOAH.
This housing attracts middle-income residents, who often hold jobs that allow local economies to function. Because of their affordability and lack of new stock, vacancy rates in NOAH apartment communities are below those of market-rate or luxury properties, at 3 to 4 percent.
Affordable housing advocates are concerned that NOAH apartment communities will soon start to disappear as their owners sell to developers who will renovate them into market-rate units.
“Absent action, the market will systematically take it away, and we’re not replacing it,” says David Smith, CEO of the Affordable Housing Institute, in an article in Urban Land. “My pitch is if you think that quality affordable housing is invaluable, then somebody needs to figure out how to purchase, reposition and preserve it.”
This is starting to happen. Mission-oriented nonprofits and investment funds—such as Mercy Housing and Enterprise Community Investment—are buying NOAH communities to maintain their affordability.