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Nonprofit housing and neighborhood spillovers

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  • Ingrid Gould Ellen

    (New York University)

  • Ioan Voicu

    (New York University)

Abstract

Nonprofit organizations play a critical role in U.S. housing policy, a role typically justified by the claim that their housing investments produce significant neighbor-hood spillover benefits. However, little work has actually been done to measure these impacts on neighborhoods. This paper compares the neighborhood spillover effects of city-supported rehabilitation of rental housing undertaken by nonprofit and for-profit developers, using data from New York City. To measure these benefits, we use increases in neighboring property values, estimated from a difference-in-difference specification of a hedonic regression model. We study the impacts of about 43,000 units of city-supported housing completed during the 1980s and 1990s, and our sample of property transactions includes nearly 300,000 individual sales. We find that both nonprofit and for-profit projects generate significant, positive spillover effects. This finding in itself is significant, given the widespread skepticism about the impact of subsidized housing on neighborhoods. We also find some differences across sectors. First, the impact of nonprofit housing remains stable over time, whereas the effect of for-profit housing declines slightly with time. Second, while large for-profit and nonprofit developments deliver similar benefits, in the case of small projects, for-profit developments generate greater impacts than their nonprofit counterparts. These differences are consistent with theoretical predictions. In particular, in the presence of information asymmetries with respect to housing quality, the non-distribution constraint should lead nonprofits to invest more than for-profits in developing and maintaining features that benefit the broader community. Meanwhile, the fact that scale makes a difference to nonprofit impacts may reflect the capacity constraints often faced by smaller nonprofits. ©2006 by the Association for Public Policy Analysis and Management

Suggested Citation

  • Ingrid Gould Ellen & Ioan Voicu, 2006. "Nonprofit housing and neighborhood spillovers," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 25(1), pages 31-52.
  • Handle: RePEc:wly:jpamgt:v:25:y:2006:i:1:p:31-52
    DOI: 10.1002/pam.20155
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    File URL: http://hdl.handle.net/10.1002/pam.20155
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    References listed on IDEAS

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    1. Pauline Vaillancourt Rosenau & Stephen H. Linder, 2003. "Two Decades of Research Comparing For-Profit and Nonprofit Health Provider Performance in the United States," Social Science Quarterly, Southwestern Social Science Association, vol. 84(2), pages 219-241.
    2. 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.
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    Cited by:

    1. Beatriz Larraz, 2011. "An Expert System for Online Residential Properties Valuation," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 69-82, April.
    2. repec:aea:jeclit:v:55:y:2017:i:2:p:609-20 is not listed on IDEAS
    3. Schuetz, Jenny & Spader, Jonathan & Cortes, Alvaro, 2016. "Have distressed neighborhoods recovered? Evidence from the neighborhood stabilization program," Journal of Housing Economics, Elsevier, vol. 34(C), pages 30-48.
    4. Brunes, Fredrik & Hermansson, Cecilia & Song, Han-Suck & Wilhelmsson, Mats, 2016. "NIMBYs for the rich and YIMBYs for the poor: Analyzing the property price effects of infill development," Working Paper Series 16/2, Royal Institute of Technology, Department of Real Estate and Construction Management & Centre for Banking and Finance (cefin).
    5. repec:asg:wpaper:1004 is not listed on IDEAS
    6. repec:eee:jhouse:v:37:y:2017:i:c:p:67-83 is not listed on IDEAS
    7. Johnson, Michael P. & Solak, Senay & Drew, Rachel Bogardus & Keisler, Jeffrey, 2013. "Property value impacts of foreclosed housing acquisitions under uncertainty," Socio-Economic Planning Sciences, Elsevier, vol. 47(4), pages 292-308.
    8. Schuetz, Jenny & Spader, Jonathan & Buell, Jennifer Lewis & Burnett, Kimberly & Buron, Larry & Cortes, Alvaro & DiDomenico, Michael & Jefferson, Anna & Redfearn, Christian & Whitlow, Stephen, 2015. "Which Way to Recovery? Housing Market Outcomes and the Neighborhood Stabilization Program," Finance and Economics Discussion Series 2015-4, Board of Governors of the Federal Reserve System (U.S.).
    9. Zwiers, Merle & van Ham, Maarten & Kleinhans, Reinout, 2017. "The Effects of Physical Restructuring on the Socioeconomic Status of Neighborhoods: Selective Migration and Upgrading," IZA Discussion Papers 10697, Institute for the Study of Labor (IZA).
    10. Olsen, Edgar O. & Zabel, Jeffrey E., 2015. "US Housing Policy," Handbook of Regional and Urban Economics, Elsevier.

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