Estimating the External Effects of Subsidized Housing Investment on Property Values (Working Paper)

Author(s): Schwartz, Amy Ellen, Ingrid Gould Ellen, Ioan Voicu and Michael H. Schill
Publication Date: May 2003

41 pages; Inventory ID WP03AS1; English


Estimating the External Effects of Subsidized Housing Investment on Property Values	314 KB

Abstract

Although housing investment is often promoted as a tool for neighborhood improvement, prior empirical research has failed to provide convincing evidence that subsidized housing investment generates significant external effects. This paper revisits the external effects of subsidized housing investment. With the benefit of a very rich dataset, we use a difference-in-difference specification of a hedonic regression model to estimate the spillover effects of publicly-assisted housing units produced under the New York City Ten Year Plan program.

The results suggest that subsidized housing investments produce significant and sustainable external benefits to urban neighborhoods. The magnitudes of the external effects are found to increase with project size, and to decrease with the proportion of units in multi-family, rental buildings and with distance from the housing investment sites. Spillovers are typically larger in the more distressed neighborhoods, although smaller projects appear to generate larger spillovers in more prosperous neighborhoods.