The Net Benefit of Demolishing Dilapidated Housing: The Case of Detroit

Dusan Paredes and Mark Skidmore

No 71, Documentos de Trabajo en Economia y Ciencia Regional from Universidad Catolica del Norte, Chile, Department of Economics

Abstract: We conduct an analysis of the costs and benefits of public investment in demolishing dilapidated residential housing in Detroit. While we estimate a positive net impact of teardowns on nearby property values, we also calculate a low marginal impact on local property tax collections. Under existing housing market conditions in Detroit, demolition costs exceed the present value of additional property tax revenues resulting from demolitions over 50 years. Using efficiency as the criteria for justifying spending public funds on demolition, average property values would have to increase by a factor of five to justify the demolition program.

Keywords: Detroit; housing market; dilapidated properties; spatial density; hedonic prices; spatial heterogeneity; multilevel regression; spatial econometrics. (search for similar items in EconPapers)
JEL-codes: R21 R31 R38 R52 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2016-11, Revised 2016-11
New Economics Papers: this item is included in nep-ure
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https://sites.google.com/a/ucn.cl/wpeconomia/archivos/WP2016-07.pdf First version, 2016 (application/pdf)

Related works:
Journal Article: The net benefit of demolishing dilapidated housing: The case of Detroit (2017)
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