CoStar, a leading data analytics firm for the commercial real estate industry, has identified 5.5 million units of naturally occurring affordable housing across the United States, what housing leaders view as a critical supply of housing for middle-class workers in a wide range of professions that enable local economies to function.

Using its propriety rating system for multifamily properties and units, CoStar also determined that so-called one- and two-star properties–the equivalent of Class B or C buildings–make up nearly 76 percent of the nearly 335,000 multifamily properties within its database. One- and two-star properties are considered examples of unsubsidized, naturally occurring affordable housing, or NOAH.

CoStar’s analysis was performed at the request of the ULI Terwilliger Center for Housing and was presented at a recent symposium in Washington, D.C. on preserving market-based workforce and affordable housing with innovative capital strategies cosponsored by the Center and the National Association of Affordable Housing Lenders. Housing leaders, advocates, and investors met to discuss the opportunity for private equity to invest in and maintain the nation’s stock of NOAH, what many consider an emerging real estate asset class.

NOAH is housing that is affordable without being supported by public subsidies such as low-income housing tax credits. At a time when the income restrictions on subsidized units and properties are set to expire, housing leaders and policymakers are looking to NOAH as a source of housing for low- and middle-income households. Yet, NOAH is perpetually at risk for being converted to market-rate or luxury housing and falling into a state of disrepair and un-inhabitability. The challenge now is how private capital can be brought to bear on preserving this vital national infrastructure.

Read Co-Star’s full presentation