The Effect of Residential Investment on Nearby Property Values: Evidence from Cleveland, Ohio
This study analyzes the effect of both new and rehabilitation residential investment on nearby property values in Cleveland, Ohio. The methodology used is hedonic price regression with spatial lagged variables that are generated applying geographic information systems. There are four major findings. First, the effect of investment on property values is geographically limited. Second, new investment has a greater impact on nearby property values than rehabilitation. Third, there is evidence that new construction and rehabilitation have a significantly positive impact in low-income areas, as well as predominantly non-minority neighborhoods. Finally and most importantly, the research suggests that small-scale investment has no impact on nearby property values. Thus, investment policy, which promotes and encourages investments that are not sufficiently large, may not be able to improve tax bases and enhance neighborhoods. We also found that results could be misleading if spatial lagged variables are inappropriately measured.
Volume (Year): 19 (2000)
Issue (Month): 1 ()
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