06-08-2016 Workshop Packet - Laserfiche WebLink

Home Browse Search

4 3 8 Simons, Magner and Baku Simons, Quercia and Maric (1998) investigated the indirect property value increases in homes located near new construction in Cleveland, Ohio. Simons and associates found that for every new unit built, the neighboring units experienced an increased value of approximately $670. They also found that rehabilitated housing was associated with a negative and significant effect on nearby property. However, this study used a spatial variable of 2-3 blocks, which may not be sufficiently accurate to detect close -in effects. In a more refined version of the last article, using superior spatial variables of 150 foot concentric rings, Ding, Simons and Baku (2000) evaluated the effect of 11e11-thborhocrd investment on nearby residential property values. The authors found that proximity to rehab housing significantly increased neighboring property values by about 13 cents for each rehab dollar of investment, (equivalent to an increase in sales price of about 4% of house price) but only within 150 feet. Large scale rehabs (in dollar and/or number of rehabs) had a larger proportioila( effect dian smaller ones. The authors concluded that the optimum scale of rehabs was to stagger investment to every other house or every third house (depending on housing density) to maximize increases to nearby property values. The average distance between houses in the Cleveland market was 40 feet side to side and 120 feet front to rear, implying that the rehab investment affected the house in front, in the rear and as far as three houses side to side. This study also found a significant positive effect of new residential construction on nearby housing, and that the effect extended further away. A statistically significant increase of six cents per dollar of new housing investment was evident within 150 feet, dwindling down to a two -cent increase between 150-300 feet from the new house. In the context of housing rehabilitation, a positive relationship between rehabbed units and surrounding homes may not reflect the full potential impact of these rehab programs because it compares the beneficial property value effect with other homes not in close proximity to rehabs in the same general time period. Because neighborhoods with substantial rehabs are most often those in econorn,ic decline, the opportunity cost of inaction, over time, may be greater than time apparent observed positive effect. Little information is evident on the economic or social impacts of CDC housing activities. However, some work has been done to examine the economic effects of some types of rehabilitation activities on the economy. For example, Rypkema (1994) looked at the economics of historic preservation. Another study by the University of Rhode Island (1993) examined the economic effects of state expenditures on historical preservation programs over a 20 -year period. Both these studies used sophisticated versions of input-output analysis that generally include both direct and induced effects on the local economy. These models are beyond the level of detail addressed in this study. Other effects of CDC rehab activities are less tangible. Because CDCs that rehab are often targeting lower income areas, new households brought in or existing