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An analysis of the neighborhood impacts of a mortgage assistance program: A spatial hedonic model

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  • Wenhua Di

    (A Senior Economist with the Federal Reserve Bank of Dallas)

  • Jielai Ma

    (A Research Associate at the Feinberg School of Medicine, Northwestern University, Chicago, IL)

  • James C. Murdoch

    (Professor of Economics and Public Policy at the University of Texas at Dallas)

Abstract

Down payment or closing cost assistance is an effective program in addressing the wealth constraints of low-and moderate-income homebuyers. However, the spillover effect of such programs on the neighborhood is unknown. This paper estimates the impact of the City of Dallas Mortgage Assistance Program (MAP) on nearby home values using a hedonic model of home sales from 1990 to 2006. We define neighborhoods of 1,000 feet around each sale and estimate the average differences in sales prices between neighborhoods with various numbers of MAP properties before and after their appearance. We find that MAP properties tend to locate in neighborhoods with lower property values; however, unless a concentration of MAP properties forms, the infusion of MAP properties has little detrimental impact on neighboring property values. Moreover, low concentration of MAP properties has a modest positive impact on surrounding property values. © 2010 by the Association for Public Policy Analysis and Management.

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File URL: http://hdl.handle.net/10.1002/pam.20530
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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Policy Analysis and Management.

Volume (Year): 29 (2010)
Issue (Month): 4 ()
Pages: 682-697

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Handle: RePEc:wly:jpamgt:v:29:y:2010:i:4:p:682-697

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Web page: http://www3.interscience.wiley.com/journal/34787/home

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  1. Deng, Yongheng & Gabriel, Stuart, 2006. "Risk-Based Pricing and the Enhancement of Mortgage Credit Availability among Underserved and Higher Credit-Risk Populations," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 38(6), pages 1431-1460, September.
  2. Aaronson, Daniel, 2000. "A Note on the Benefits of Homeownership," Journal of Urban Economics, Elsevier, vol. 47(3), pages 356-369, May.
  3. Richard P. Nathan, 2008. "The role of random assignment in social policy research," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 27(3), pages 606-606.
  4. Richard P. Nathan, 2008. "The role of random assignment in social policy research," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 27(2), pages 401-415.
  5. Ingrid Gould Ellen & Amy Ellen Schwartz & Ioan Voicu & Michael H. Schill, 2007. "Does federally subsidized rental housing depress neighborhood property values?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 26(2), pages 257-280.
  6. Jeffrey R. Kling & Jeffrey B. Liebman & Lawrence F. Katz, 2005. "Experimental Analysis of Neighborhood Effects," NBER Working Papers 11577, National Bureau of Economic Research, Inc.
  7. Dubin, Robin A., 1992. "Spatial autocorrelation and neighborhood quality," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 22(3), pages 433-452, September.
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