The Impact of Supportive Housing on Surrounding Neighborhoods

Abstract

Communities across New York City and around the nation commonly oppose proposals to open supportive housing in their neighborhoods because of fear that the housing will decrease the quality of life in the neighborhood, and lead to reductions in property values. This study aims to give supportive housing providers and local government officials the objective, credible information they need to guide policy decisions and to respond to opponents' fears and arguments. Using a difference-in-difference regression model to isolate the effect of supportive housing from more general macro and micro market trends and neighborhood variations, this paper examines the impact that almost 14,000 units of supportive housing created in New York City over the past twenty five years have had on their host neighborhoods over time.

In a preliminary analysis, we find little evidence that supportive housing facilities diminish the value of surrounding properties. We find evidence that prices of properties surrounding supportive housing facilities are lower than comparable properties in the same neighborhood prior to the opening of the facility, and that this gap tends to narrow following the opening of a facility. Specifically, the preliminary analysis suggests that modestly-sized supportive housing developments (which are typical in New York City) may have small, positive impacts on neighboring property values, though these positive impacts decline as project size increases. Very large facilities may have negative impacts on the surrounding neighborhood.

Keywords: Supportive housing, neighborhoods

JEL Classification: R52