IDEAS home Printed from https://ideas.repec.org/a/ucp/jpolec/v118y2010i3p485-535.html
   My bibliography  Save this article

Housing Externalities

Author

Listed:
  • Esteban Rossi-Hansberg
  • Pierre-Daniel Sarte
  • Raymond Owens

Abstract

Using data compiled from concentrated residential urban revitalization programs implemented in Richmond, Virginia, between 1999 and 2004, we study residential externalities. We estimate that housing externalities decrease by half approximately every 1,000 feet. On average, land prices in neighborhoods targeted for revitalization rose by 2-5 percent at an annual rate above those in a control neighborhood. These increases translate into land value gains of between $2 and $6 per dollar invested in the program over a 6-year period. We provide a simple theory that helps us estimate and interpret these effects in terms of the parameters of the model. (c) 2010 by The University of Chicago. All rights reserved.

Suggested Citation

  • Esteban Rossi-Hansberg & Pierre-Daniel Sarte & Raymond Owens, 2010. "Housing Externalities," Journal of Political Economy, University of Chicago Press, vol. 118(3), pages 485-535, June.
  • Handle: RePEc:ucp:jpolec:v:118:y:2010:i:3:p:485-535
    DOI: 10.1086/653138
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/653138
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1086/653138?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-954, July.
    2. Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117, Elsevier.
    3. Strange, William, 1992. "Overlapping neighborhoods and housing externalities," Journal of Urban Economics, Elsevier, vol. 32(1), pages 17-39, July.
    4. Anglin, Paul M & Gencay, Ramazan, 1996. "Semiparametric Estimation of a Hedonic Price Function," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 633-648, Nov.-Dec..
    5. 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.
    6. Schall, Lawrence D, 1976. "Urban Renewal Policy and Economic Efficiency," American Economic Review, American Economic Association, vol. 66(4), pages 612-628, September.
    7. Karl E. Case & Robert J. Shiller, 1987. "Prices of single-family homes since 1970: new indexes for four cities," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 45-56.
    8. Benabou, R., 1992. "Heterogeneity, Stratification, and Growth," Working papers 93-4, Massachusetts Institute of Technology (MIT), Department of Economics.
    9. Adonis Yatchew & Joungyeo Angela No, 2001. "Household Gasoline Demand in Canada," Econometrica, Econometric Society, vol. 69(6), pages 1697-1709, November.
    10. Morris A. Davis & Francois Ortalo-Magne, 2011. "Household Expenditures, Wages, Rents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(2), pages 248-261, April.
    11. Yatchew, A., 1997. "An elementary estimator of the partial linear model," Economics Letters, Elsevier, vol. 57(2), pages 135-143, December.
    12. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171, Elsevier.
    13. John DiNardo & Justin L. Tobias, 2001. "Nonparametric Density and Regression Estimation," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 11-28, Fall.
    14. Robert A. Simons & Roberto G. Quercia & Ivan Maric, 1998. "The Value Impact of New Residential Construction and Neighborhood Disinvestment on Residential Sales Price," Journal of Real Estate Research, American Real Estate Society, vol. 15(2), pages 147-162.
    15. Durlauf, Steven N., 2004. "Neighborhood effects," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 50, pages 2173-2242, Elsevier.
    16. Schwartz, Amy Ellen & Ellen, Ingrid Gould & Voicu, Ioan & Schill, Michael H., 2006. "The external effects of place-based subsidized housing," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 679-707, November.
    17. Anna M Santiago & George C Galster & Peter Tatian, 2001. "Assessing the property value impacts of the dispersed subsidy housing program in Denver," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 20(1), pages 65-88.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Raymond E. Owens & Esteban Rossi-Hansberg & Pierre-Daniel G. Sarte, 2008. "Housing externalities : evidence from spatially concentrated urban revitalization programs," Working Paper 08-03, Federal Reserve Bank of Richmond.
    2. Ismail, Mohammad & Wilhelmsson, Mats, 2022. "New housing investments' effects on gentrification and affordability in Stockholm, Sweden," Working Paper Series 22/8, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    3. Qi Li & Jeffrey Scott Racine, 2006. "Nonparametric Econometrics: Theory and Practice," Economics Books, Princeton University Press, edition 1, volume 1, number 8355.
    4. Ayoung Woo & Kenneth Joh & Shannon Van Zandt, 2016. "Unpacking the impacts of the Low-Income Housing Tax Credit program on nearby property values," Urban Studies, Urban Studies Journal Limited, vol. 53(12), pages 2488-2510, September.
    5. Guy Michaels & Ferdinand Rauch & Stephen J Redding, 2019. "Task Specialization in U.S. Cities from 1880 to 2000," Journal of the European Economic Association, European Economic Association, vol. 17(3), pages 754-798.
    6. Emmanuel Skoufias & Vincenzo Di Maro & Teresa González‐Cossío & Sonia Rodríguez Ramírez, 2009. "Nutrient consumption and household income in rural Mexico," Agricultural Economics, International Association of Agricultural Economists, vol. 40(6), pages 657-675, November.
    7. Amine Ouazad, 2020. "Resilient Urban Housing Markets: Shocks vs. Fundamentals," Papers 2010.00413, arXiv.org, revised Oct 2020.
    8. Lessmann, Christian, 2014. "Spatial inequality and development — Is there an inverted-U relationship?," Journal of Development Economics, Elsevier, vol. 106(C), pages 35-51.
    9. Luisito Bertinelli & Eric Strobl, 2007. "Urbanisation, Urban Concentration and Economic Development," Urban Studies, Urban Studies Journal Limited, vol. 44(13), pages 2499-2510, December.
    10. Jumrani, Jaya, 2023. "How responsive are nutrients in India? Some recent evidence," Food Policy, Elsevier, vol. 114(C).
    11. Rosenthal, Stuart S. & Ross, Stephen L., 2015. "Change and Persistence in the Economic Status of Neighborhoods and Cities," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1047-1120, Elsevier.
    12. Sergey Kichko, 2020. "Competition, land prices and city size [Gravity redux: estimation of gravity-equation coefficients, elasticities of substitution, and general equilibrium comparative statics under asymmetric bilate," Journal of Economic Geography, Oxford University Press, vol. 20(6), pages 1313-1329.
    13. Jan Eeckhout & Nezih Guner, 2014. "Optimal Spatial Taxation: Are Big Cities too Small?," Working Papers 804, Barcelona School of Economics.
    14. Jan Eeckhout & Nezih Guner, 2017. "Optimal Spatial Taxation: Are Big Cities too Small?," Working Papers wp2018_1705, CEMFI.
    15. Borck, Rainald, 2019. "Public transport and urban pollution," Regional Science and Urban Economics, Elsevier, vol. 77(C), pages 356-366.
    16. Felix Richter, 2014. "Winner Picking in Urban Revitalization Policies: Empirical Evidence from Berlin," ERSA conference papers ersa14p1424, European Regional Science Association.
    17. Jeffrey Brinkman, 2014. "The supply and demand of skilled workers in cities and the role of industry composition," Working Papers 14-32, Federal Reserve Bank of Philadelphia.
    18. Bo-sin Tang & Kwan To Wong, 2020. "Assessing externality: Successive event studies on market impacts of new housing development on an old residential neighbourhood," Environment and Planning B, , vol. 47(1), pages 156-173, January.
    19. Ioannides, Yannis M., 2003. "Interactive property valuations," Journal of Urban Economics, Elsevier, vol. 53(1), pages 145-170, January.
    20. Chang, Hung-Hao & Nayga Jr., Rodolfo M., 2011. "Mother's nutritional label use and children's body weight," Food Policy, Elsevier, vol. 36(2), pages 171-178, April.

    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Housing Externalities (JPE 2010) in ReplicationWiki

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jpolec:v:118:y:2010:i:3:p:485-535. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JPE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.