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That means the useful question is not “Do apartments always lower home values?” It is: What kind of project is being built, what property is nearby, how close is it, when is the effect measured, and are we discussing a sale-price level, a rent or a long-term price trend?
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Why one apartment project can have several different effects
A multifamily building changes the local housing market through more than one channel. The additional units give renters and buyers alternatives, which can reduce pressure on nearby rents or prices when supply was constrained. At the same time, a project can be associated with restaurants or other amenities that make an area more attractive. Density can also create external costs that some households value negatively. The balance differs by neighborhood and by property type.
Supply and substitutability
When new apartments add meaningful housing stock, some households that otherwise would have competed for existing units have another option. Xiaodi Li’s New York City study found that a 10% increase in housing stock within 500 feet was associated with approximately 1% lower nearby rents. The study also estimated that a 10% increase in condominium stock within 500 feet was associated with a 0.9% reduction in condo sale prices. Those are estimates for the study’s New York City high-rise setting, not a national rule or a forecast for a particular building.
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Amenities and density-related externalities
Li also reported that new high-rises attracted new restaurants. In the area studied, however, the estimated supply effect outweighed the amenity effect, producing a net negative rent and condo-price relationship. Other neighborhoods may have a different balance. A project that brings services, improves a previously underused site or supports a stronger commercial area can be viewed differently from a project whose added density is perceived as a cost.
Local rules and land constraints
Regulation determines how much housing can be added and what form it takes. A zoning change that technically permits apartments but does not permit enough density may produce little additional supply. Conversely, allowing smaller multifamily buildings across more sites may create a larger aggregate supply response than relying only on a few large apartment towers.
What the available studies actually found
The findings below are not interchangeable. They examine different cities, periods, property samples, distance bands, project categories and statistical methods.
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| Study and setting | Project or policy examined | Nearby outcome | Reported result |
|---|---|---|---|
| Urban Institute, Alexandria, Virginia (transactions from 2000–2020) | Affordable housing units | Sales of single-family homes, duplexes, cooperatives and residential condominiums within one-sixteenth of a mile | Affordable units were associated with an average 0.09% increase in nearby property values. This is a local association, not an estimate for all market-rate or subsidized projects. |
| Xiaodi Li, Journal of Economic Geography (published online 2021; issue 2022), New York City | Growth in nearby housing and condominium stock, including new high-rises | Rents and condominium sale prices within 500 feet | Each 10% increase in housing stock was associated with 1% lower rents; each 10% increase in condo stock was associated with 0.9% lower condo sale prices. New restaurants appeared, but the estimated supply effect dominated in the study area. |
| Antti Kurvinen and Jaakko Vihola (2016), Helsinki Metropolitan Area | Residential high-rise areas outside city and district centres | Apartment values within a 300-metre radius and price trends | An immediate positive apartment-value effect was reported within 300 metres, while the effect on the price trend was not statistically significant. |
| Amrita Kulka, Aradhya Sood and Nicholas Chiumenti, Federal Reserve Bank of Boston working paper (2022), Greater Boston | Changes to multifamily zoning and density restrictions | Regional housing supply, rents and single-family prices | Relaxing density restrictions increased supply and reduced rents and single-family prices. Multifamily zoning without additional density was less likely to increase apartment supply or lower rents. The paper reports larger supply effects for smaller multifamily buildings than for larger apartments. |
These results show why a single percentage should not be applied to every project. The Alexandria result concerns affordable units and nearby property sales. The New York estimates concern changes in housing stock and specific nearby rents and condo prices. The Helsinki result separates an immediate value level from a longer-run trend. The Boston evidence concerns regulatory reforms across Greater Boston rather than a simple before-and-after test of one building.
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Will new apartments lower my home’s value?
They might, but the evidence does not support treating a decline as automatic. A nearby homeowner could see a lower sale price if additional units compete with the home or if buyers place a negative value on the project’s density. The same homeowner could see no measurable effect, or a higher value, if the project improves the area’s amenity base or helps stabilize a neighborhood that lacked housing and investment.
The property’s type matters. A nearby single-family house is not exposed to exactly the same market forces as an existing condominium, and a rental apartment is affected through rents rather than an owner-occupier sale price. A study of one outcome cannot be used as a proxy for all of them.
Does an apartment building increase property values nearby?
Sometimes an immediate increase is possible. The Helsinki study found a positive apartment-value effect within 300 metres, but no statistically significant effect on the price trend. In practical terms, a one-time level difference is not evidence that the property will appreciate faster every year. The Alexandria study also found a small positive association for nearby sales around affordable units, but its result was specific to Alexandria, the 2000–2020 transaction period and the affordable-housing category.
A positive result should therefore be described precisely: it may apply to a particular property sample and distance band, not to every home around every apartment building.
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Do new apartments lower rents in the neighborhood?
Additional housing can lower nearby rents when it expands the stock enough to give renters alternatives. Li’s New York City estimate—about 1% lower rents for each 10% increase in housing stock within 500 feet—illustrates that supply channel. It does not establish that every new building lowers rents, nor does it say how a project outside that 500-foot band will affect a particular lease.
The Boston Fed findings add a policy qualification. Multifamily zoning alone, without the density needed to make construction feasible at scale, was less likely to increase apartment supply or reduce rents. The design of the rules matters as much as the label attached to the zoning.
How far away can construction affect prices?
There is no universal cutoff. The studies use different distance bands: one-sixteenth of a mile in Alexandria, 500 feet in New York City and 300 metres in Helsinki. Those bands identify the areas analyzed by each study; they are not a general rule that effects stop at a specific number of feet.
Distance is only one part of exposure. A property close to a project may be affected differently depending on whether it faces the site, shares the same access routes, competes in the same rental submarket or benefits from the same nearby amenities. The project’s size, status and timing also matter. Researchers may measure effects after approval, during construction or after completion, and those periods need not produce the same result.
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Why project details change the likely direction
Affordability status
Affordable housing is a distinct category, not a stand-in for every apartment development. The Alexandria estimate involved affordable units and nearby property transactions. It should not be recast as a prediction for a market-rate complex or for every subsidized development in another city.
Scale and building form
Adding a few smaller multifamily buildings across a region can have a different supply effect from concentrating a large number of units in one high-rise. The Boston Fed working paper reports larger supply effects for smaller multifamily buildings than for larger apartments in its Greater Boston analysis. That finding concerns the response to density-related policy, not a guaranteed value effect from one building.
Market conditions
In a land-constrained market with unmet demand, new units may relieve competition and moderate rents. In a market where demand is weak or the project does not add much usable supply, the balance may differ. The cited studies cover Alexandria, Greater Boston, New York City and the Helsinki Metropolitan Area; their estimates should not be treated as nationally representative.
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National averages cannot appraise an individual address. A disciplined local review should separate what is known from what is conjecture.
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- Identify the property outcome. Decide whether the question concerns a home’s eventual sale price, a condominium’s value, a rental unit’s lease rate or the pace of future appreciation. Do not combine these outcomes.
- Map the relevant distance. Measure the site from the property and note whether it falls inside a study band such as 500 feet, 300 metres or one-sixteenth of a mile. Treat the band as a comparison aid, not a guaranteed boundary.
- Describe the project precisely. Record unit count, building form, affordable or market-rate status, construction stage, expected completion and any associated commercial or public improvements.
- Check the local comparison set. Review comparable sales or leases for similar properties before and after nearby projects or approvals. Comparables should match property type, condition, location and time period as closely as possible.
- Separate approval, construction and completion. A market may react when a project is announced, when entitlement is granted, during construction or when residents move in. A study that measures one stage cannot automatically answer a question about another.
- Review infrastructure and amenities. Determine what changes are actually funded or operating, rather than assuming that every proposed restaurant, service or improvement will materialize.
- Use a qualified local valuation process for a decision. The studies establish associations in defined settings; they do not provide a property appraisal or a guaranteed forecast for one address.
What homeowners, buyers and renters should avoid inferring
- Do not assume apartments always reduce nearby values.
- Do not assume every project raises values because one study found a positive association.
- Do not apply the New York rent or condo estimates to a different city, property type or distance without supporting local evidence.
- Do not treat a zoning-reform estimate as the effect of one building.
- Do not confuse a short-term price-level change with a continuing change in appreciation.
- Do not treat affordable-housing findings as estimates for all market-rate or subsidized developments.
What the evidence means for builders and local officials
The findings support evaluating housing policy as a supply-and-neighborhood package rather than focusing only on the visual presence of an apartment building. If the goal is to improve affordability, rules must allow enough density and feasible building forms to produce additional units. The Boston Fed summary states: “An important way to ensure low rents and low house prices is to increase the housing supply, which in land-constrained metropolitan areas involves constructing denser forms of housing such as smaller single-family homes and multifamily apartment buildings.”
For a particular proposal, decision-makers should examine who is likely to use the new units, how many units are genuinely added to the market, what nearby properties are being compared, and whether promised amenities are part of the approved project. Those details help distinguish a supply response from a purely speculative claim about neighborhood desirability.
How strong is the conclusion?
The strongest defensible conclusion is conditional: new multifamily construction can be associated with lower nearby rents or sale prices, higher nearby values or no statistically clear change. The cited work spans different geographies, methods and periods, including Alexandria transactions from 2000–2020, a 2022 Greater Boston working paper, New York City high-rise construction and a 2016 Helsinki study. None supplies a current, nationally representative estimate for the effect of any multifamily project on every nearby property type.
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For an individual property, the best evidence will be local: comparable transactions, the project’s size and affordability status, exact distance, development stage, nearby infrastructure and amenities, and current market conditions. Without those facts, a precise percentage would create false confidence.
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