Should Your Church Develop Affordable Housing?

The Reality Behind the $400K-Per-Unit Price Tag

Americans face a growing housing crisis. In urban areas especially, skyrocketing rents trap families for decades with no path to homeownership. Luxury mid-rise apartments fill gentrified neighborhoods while zoning codes prohibit the diverse housing types—duplexes, courtyard apartments, rowhouses—that were common before single-family detached homes became the measure of success. The shortage is acute, the need is visible, and communities are desperate for solutions.

Against this backdrop, pastors and church leaders increasingly see their underused buildings and land as an opportunity to respond. In the past month alone, I've heard variations of the same statement from multiple clergy: "We're thinking about affordable housing" or "The congregation is exploring affordable housing for our property." The impulse is understandable and altruistic. Churches sit on valuable real estate in neighborhoods where housing is scarce. Why not leverage those assets to serve low-income families struggling with housing insecurity? Why not be part of the solution?

The question isn't whether churches should care about housing—of course they should. The question is whether "affordable housing development" is actually the right tool for congregations to wield, or whether the complexity behind that term requires a different approach entirely.

When many of us hear the term "affordable housing," we may simply think of homes and apartments that are available to people at rates lower than the local market might demand. However, the term "affordable housing" is a federally regulated category of housing with specific income thresholds, compliance requirements, and financing mechanisms that only professional developers with specialized expertise can navigate.

The regulatory guides that define affordable housing make it expensive to develop regardless of whether building on vacant land or retrofitting a building from another use. New construction affordable housing averages $400,000-$500,000 per unit nationally, with costs varying by region according to the Affordable Housing Finance survey. Federally funded projects may be less expensive, but that is because they are more adept at leveraging unique funding sources that aren't guaranteed to most developers and entities looking to create this type of housing. Adaptive reuse of existing buildings like schools or churches doesn't necessarily reduce costs—retrofit projects have ranged from $210,000 to $280,000+ per unit, and churches with deferred maintenance or complex layouts often see costs that approach or exceed new construction. While these are facts around redeveloping a church property for affordable housing, we do see churches converted to residences, typically in affluent or higher-income towns and cities for higher-earning persons.

Transitional and supportive housing that uses church-owned or shared facilities is more financially accessible for churches than developing independent housing units but still requires significant capital investment for building code compliance, accessibility upgrades, and fire safety systems—work that churches typically undertake in partnership with experienced housing operators who secure grants and manage operations.

If your congregation is considering affordable housing development, these questions will help you understand whether you're equipped for this endeavor—or whether you should pursue different strategies that better match your long-term goals and capacity.

1. Do we understand the nuances of affordable housing and the use of the term? When someone suggests affordable housing for our property, are they thinking of independent units or supportive short- or long-term housing with wraparound services?

2. Are we willing to sell our property to a developer and accept that we'll have no control over whether the final project includes affordable units, or whether those units remain affordable long-term? Most mixed-income projects include only a small percentage of affordable units, and developers prioritize financial viability.

3. Do we have $5-10 million in capital available for development (assuming 15-20 units at $400K-$500K each), plus annual operating reserves? If not, we're completely dependent on outside funding we may not secure.

4. Can we sustain a 3-5 year development timeline with no guarantee of success, while continuing our other ministries and building maintenance?

5. Are we prepared to cede operational control to a housing operator who will make decisions based on regulatory compliance and financial sustainability rather than congregational values?

6. Have we talked to existing housing providers in our community to understand what they actually need from us?

One example of a church that has been intentionally pursuing housing on their property is St. Paul's Episcopal Church of Syracuse, New York. Over 10 years ago when diocesan offices relocated from the church's Parish House, the congregation began exploring how to repurpose the building and conversations about housing emerged. St. Paul's launched a $2.2 million "Open Doors" capital campaign to renovate the Parish House, updating infrastructure and creating accessible entrances. With that renovation now complete, A Tiny Home For Good, a local nonprofit serving housing-insecure residents, can begin interior construction of 10 senior housing units on the second floor. Rather than becoming developers themselves, St. Paul's partnered with ATHFG, which will independently finance the housing construction while serving as construction manager, landlord, and care manager. St. Paul's role is landlord of the building—not developer, operator, or service provider. After a decade of planning, their vision for housing on the property is now becoming reality in 2025.

So when I hear clergy say "We're thinking about affordable housing," my first response is: Which kind? And my second is: In what role?

If your congregation is completing its legacy through property disposition—whether through closure, merger, or relocation—selling to an affordable housing developer can be a meaningful way to ensure your property continues serving the community. You're not becoming developers; you're transferring assets to an entity with the expertise and capital to execute what you cannot.

If your congregation intends to continue operating and sees housing as part of your ministry, the successful model is partnership, not independent development. Churches that pursue affordable housing development while maintaining other ministries often find themselves trapped in projects they cannot fund or sustain. St. Paul's succeeded because they understood their role: provide renovated space, partner with experienced operators, and let professionals handle what requires millions in capital and decades of compliance expertise.

The housing crisis is real. Churches should absolutely care about it and contribute to solutions. But understanding these realities before making long-range plans will help you pursue strategies that match your actual capacity—not just your aspirations. Sometimes the most faithful response isn't building the housing yourself, but making sure housing gets built by those who can do it well.