Housing externalities: evidence from spatially concentrated urban revitalization programs

Esteban Rossi-Hansberg (), Pierre Daniel Sarte () and Raymond E. Owens

No 08-03, Working Paper from Federal Reserve Bank of Richmond

Abstract: Using data compiled from concentrated residential urban revitalization programs implemented in Richmond, VA, between 1999 and 2004, we study residential externalities. Specifically, we provide evidence that in neighborhoods targeted by the programs, sites that did not directly benefit from capital improvements nevertheless experienced considerable increases in land value relative to similar sites in a control neighborhood. Within the targeted neighborhoods, increases in land value are consistent with externalities that fall exponentially with distance. In particular, we estimate that housing externalities decrease by half approximately every 990 feet. On average, land prices in neighborhoods targeted for revitalization rose by 2 to 5 percent at an annual rate above those in the control neighborhood. These increases translate into land value gains of between $2 and $6 per dollar invested in the program over a six-year period. We provide a simple theory that helps us interpret and estimate these effects.

Keywords: Housing; Land use; Economic development; Federal Reserve District, 5th (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo and nep-ure
Date: 2008
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