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The Value Impact of New Residential Construction and Neighborhood Disinvestment on Residential Sales Price

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    Abstract

    The topic of neighborhood redevelopment is central to 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 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 1% increase in the tax delinquency rate. The spatial variability of these effects is also explored.

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    File URL: http://aux.zicklin.baruch.cuny.edu/jrer/papers/pdf/past/vol15n02/v15p147.pdf
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    Bibliographic Info

    Article provided by American Real Estate Society in its journal Journal of Real Estate Research.

    Volume (Year): 15 (1998)
    Issue (Month): 2 ()
    Pages: 147-162

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    Handle: RePEc:jre:issued:v:15:n:2:1998:p:147-162

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    Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
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    Web page: http://www.aresnet.org/

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    Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
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    Web: http://aux.zicklin.baruch.cuny.edu/jrer/about/get.htm

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    1. Rothenberg, Jerome & Galster, George C. & Butler, Richard V. & Pitkin, John R., 1991. "The Maze of Urban Housing Markets," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226729510, March.
    2. Kerry D. Vandell & Robert H. Zerbst, 1984. "Estimates of the Effect of School Desegregation Plans on Housing Values Over Time," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 12(2), pages 109-135.
    3. M Dear & Ruth Fincher & Lise Currie, 1977. "Measuring the external effects of public programs," Environment and Planning A, Pion Ltd, London, vol. 9(2), pages 137-147, February.
    4. Quigley, John M., 1982. "Nonlinear budget constraints and consumer demand: An application to public programs for residential housing," Journal of Urban Economics, Elsevier, vol. 12(2), pages 177-201, September.
    5. Mingche M. Li & H. James Brown, 1980. "Micro-Neighborhood Externalities and Hedonic Housing Prices," Land Economics, University of Wisconsin Press, vol. 56(2), pages 125-141.
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    Cited by:
    1. Chengri Ding & Robert Simons & Esmail Baku, 2000. "The Effect of Residential Investment on Nearby Property Values: Evidence from Cleveland, Ohio," Journal of Real Estate Research, American Real Estate Society, vol. 19(1), pages 23-48.
    2. Stephan Whitaker & Thomas J. Fitzpatrick IV, 2012. "The impact of vacant, tax-delinquent, and foreclosed property on sales prices of neighboring homes," Working Paper 1123, Federal Reserve Bank of Cleveland.
    3. Kai-yan Lee, 2008. "Foreclosure's price-depressing spillover effects on local properties: a literature review," Public and Community Affairs Discussion Papers 2008-1, Federal Reserve Bank of Boston.
    4. Luca D’Acci, 2014. "Monetary, Subjective and Quantitative Approaches to Assess Urban Quality of Life and Pleasantness in Cities (Hedonic Price, Willingness-to-Pay, Positional Value, Life Satisfaction, Isobenefit Lines)," Social Indicators Research, Springer, vol. 115(2), pages 531-559, January.

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