The Value Impact of New Residential Construction and Neighborhood Disinvestment on Residential Sales Price
Posted: 22 Oct 1998
The topic of neighborhood redevelopment is central to the field residential appraisal and the lending process. We examine both the effect of neighborhood upgrading and decline, captured by subsidized new residential construction and sustained property tax delinquency respectively, on the sales price of one-to two family homes. The research uses a two stage hedonic price model of 12,100 individual residential sales in the City of Cleveland, Ohio during 1992-94. Results show a significant positive effect of $670 on the sales price of existing housing for each new unit built in a one-to-two block area. A decrease in sales price of $778 is associated with a one percent increase in the tax delinquency rate. The spatial variability of these effects is also explored.
JEL Classification: R12, R13
Suggested Citation: Suggested Citation