Panel Paper:
Spill-over Effects of Public Real Estate Investments on Local Property Values
Friday, November 3, 2017
Wright (Hyatt Regency Chicago)
*Names in bold indicate Presenter
Housing agencies and governments have long sought to improve high-poverty neighborhoods through major public investments. Those investments such as in housing, parks, and libraries may not only benefit the direct beneficiaries, but are also intended to have spill-over effects such as through increased property market values. But quantifying these effects has been difficult. In this paper, we examine the case of two low-income neighborhoods in Pittsburgh that were similar and on similar trajectories as of the 1990s. But starting in 1999, one of the neighborhoods received substantial public investments have continued through the that continued through the present day (a total of over $550 million of total development costs in projects partly funded with public dollars in the target neighborhood, compared to around $80 million in the comparison neighborhood). Using a difference-in-difference estimation strategy, we find substantial spill-over effects to local property sales prices not realized in other comparison neighborhood. The total effect after 20 years of heightened investment was about 24% increase in sales price, holding constant property characteristics. We find that these effects grew over time. On average, each additional $10 million dollars of public real estate investment locally was associated with 1.7% increase in local sales prices.
