Sustainable and Affordable Housing Is No Longer a Pipe Dream

Fresh interest in green building among investors, new incentives, and stricter building codes are making it more possible to include green building practices in affordable housing production.

2 minute read

April 26, 2022, 10:00 AM PDT

By Diana Ionescu @aworkoffiction


Modern Passive House Exterior. Modern energy efficiency house with skylight windows and solar panels on the roof top.

Passive House design relies on natural lighting, renewable energy, and sustainable building materials to reduce a home's carbon footprint. | Radovan1 / Passive House with solar panels and skylights.

Until recently, housing developers often faced a choice between lower building costs and a lower carbon footprint. “Simply put, the lower the carbon footprint, the higher the cost to build.” But now, writes Allen Feliz, “Thanks to a combination of incentives, the growing popularity of ESG investing and stricter building codes, affordable housing and decarbonization are no longer mutually exclusive.”

As Feliz notes, “Incentives defray costs for both new construction and retrofits. Fannie Mae and Freddie Mac, for example, have robust programs for green financing.” Meanwhile, “Innovations in the works should make decarbonization initiatives and sustainable building less costly. Ravi Malhotra, founder and president of ICAST, offers the example of heat pumps that provide more efficient cooling, space heating and water heating.”

According to the article, ESG (Environmental, Social, and Governance) investing is one boon to green building. “Notably, many of the most prominent investors and lenders in the affordable housing space have strict ESG mandates that influence their funding decisions.” In the near future, “Developers and investors may eventually have no choice but to decarbonize their portfolios and build sustainably, thanks to ever-stricter building codes. California has a Green Building Standards Code. New York City has implemented Local Law 97, which limits operational carbon emissions. Boston has enacted BERDO 2.0, which requires large buildings to reduce their energy and water use.”

Feliz points to a development in Garfield Park, Chicago, built by Preservation of Affordable Housing (POAH) that will met Passive House standards, a set of strict sustainability guidelines, as one example of how sustainable building and affordable housing can coexist.

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