Research Brief: The Hidden Cost of Water

In affordable housing, the strongest threats to long-term performance are often the ones you cannot see. Water is a perfect example. According to new analysis from ION, more than half of the water paid for in affordable multifamily housing is wasted before it ever reaches a sink or shower. Running toilets, aging heaters, and degraded fixtures quietly drain over 390 billion gallons each year, costing the sector more than $5.8 billion annually. For an industry built on tight margins, that level of invisible loss is not just an operational nuisance, it is a direct hit to NOI and the underwriting assumptions that support every deal.

Rising water and sewer rates make the problem worse. Over the past decade, water costs have increased by 4 to 6 percent per year, far outpacing inflation and other utilities. When half of a property’s water use is wasted, and the price of that waste rises faster than everything else, financial performance becomes unpredictable. Underwriting becomes guesswork, DSCR weakens, and refinancing options narrow. Climate volatility adds another layer of exposure, since drought, aging infrastructure, and scarcity push rates even higher.

Efficient, resilient buildings protect residents and protect returns. Real-time leak detection and active water management do more than conserve resources. They stabilize cash flows, reduce operating expenses, and increase debt capacity. ION’s data shows that buildings using modern water-management systems use less than half the water of a typical property. That gap represents real operating income that strengthens DSCR, raises valuations, and creates room for long-term affordability.

If we want affordable housing to behave like durable economic infrastructure, we must manage the forces that make it volatile. Water is one of the simplest places to start.

Read the full white paper to see the data and case studies for yourself, and download the Multifamily Impact Framework to understand how Climate and Resilience fits into a broader system for improving performance and impact.