property values impacts summary from Bratt

[Community Development Banking List]

Original message from: rachel.bratt@tufts.edu

Colleagues, I have been collecting information on this topic and
compiled the following for teaching, citing in papers, and for speaking
at community meetings, etc. Hope it is useful. Best, Rachel Bratt


Property Value Impacts Summary

*Prepared by Rachel G. Bratt, Professor*

*Department of Urban and Environmental Policy and Planning*

*Tufts University*

*rachel.bratt@tufts.edu*

*Compiled October 2009*

* *

In the US, invariably there’s opposition to the development of
multifamily housing, particularly housing that is targeted for a lower
income population. The phrase that’s often used to express this
opposition is known as NIMBY—perhaps this phrase is commonly used here
as well. It means, “not in my back yard.” Opponents to subsidized
housing developments often invoke the likelihood that the new housing
will create a number of problems, such as increased traffic, burdens on
the local school systems due to an increased student population, the
possibility of increased crime, and a fear that property values of
neighboring homes will be reduced.

Proponents of multifamily housing typically point out that such
criticisms often mask underlying biases and racist attitudes. However,
in an effort to assess the extent to which these concerns may have
merit, a number of US researchers have undertaken a range of studies.


A thorough review of seventeen^ research projects that attempted to
measure the effect of affordable^ housing on property values
revealed that “the extent to which property^ values are lowered
depends on a variety of factors” that are often independent of the
subsidized nature of a particular development or the fact that the
development is multifamily. Specifically, the quality of design and^
management of the housing were among the most important criteria in
explaining property value changes. (“Does Affordable Housing
Detrimentally Affect Property Values? A Review of the Literature ,”
Nguyen, Journal of Planning Literature, 2005
http://jpl.sagepub.com/cgi/content/abstract/20/1/15).

In a recent econometric analysis of the impacts of CDC development work
on property values, it was found that these groups have been able to
“spark a chain reaction of investment that leads to dramatic
improvements to neighborhoods.” Specifically, the study showed that “CDC
investments in affordable housing and commercial retail facilities have
led to increases in property values … that are sometimes as great as 69
percent higher than they would have been in the absence of the
investment.” (“The Impact of Community Development Corporations on Urban
Neighborhoods,” Galster, Levy, Sawyer, Temkin, Walker, Urban Institute,
2005 http://www.urban.org/UploadedPDF/311217_CDCs.pdf).

Another rigorous research study conducted in Massachusetts concluded
that the “introduction of large-scale high density mixed income rental
developments in single-family neighborhoods /does not/ affect the value
of surrounding homes.” The authors concluded that “the fear of potential
asset-value loss among suburban homeowners is misplaced.” (“Effects of
Mixed-Income, Multi-Family Rental Housing Developments on Single-Family
Housing Values,” Pollakowski, Ritchay, Weinrobe, MIT Center for Real
Estate, 2005
http://web.mit.edu/cre/research/hai/...HAI_0405.pdf).

Another highly respected analyst from NYU both reviewed existing studies
as well as carried out an investigation in New York City. The study
concluded: “The evidence clearly fails to support the notion that
subsidized housing will, as a general matter, depress neighborhood
property values or otherwise undermine communities…the neighborhood
impacts of subsidized rental housing will differ depending on where it
is built, the scale of the development, the characteristics of its
tenants, and the nature of ownership and management.” (“Spillovers and
Subsidized Housing: The Impact of Subsidized Rental Housing on
Neighborhoods,” Ellen in Retsinas and Belsky, eds., /Revisiting Rental
Housing: Policies, Programs and Priorities/, Brookings Institution
Press, 2008).

Between January and April 2009, a group of four graduate students
working under my direction at Tufts University examined four affordable
housing developments built under the guidelines of Massachusetts’
Chapter 40B that had been strongly opposed by local residents or town
officials. They reviewed the arguments that were presented before the
developments were built and they assessed the outcomes some 2-3 years
after the buildings were occupied. We were interested in determining the
extent to which the fears and concerns that had been articulated when
the developments were proposed, actually materialized. Interviews with
over 40 individuals who were knowledgeable about the developments
revealed that none of the predicted negative outcomes and fears have
materialized. The buildings are attractive, environmental impacts have
been negligible, municipal services have been able to meet the increased
demand, traffic problems have not occurred, site planning has maximized
open space, and property values have not decreased. While at least one
development contributed to an increase in the number of students in the
school system, pre-construction estimates were far higher than the
actual outcome. Moreover, these additional costs are partially or fully
offset by the property taxes paid by the development. Finally, there is
no evidence that the new residents of the developments have created
adverse social conditions in the community.

The cases also reveal how the 40B process provides significant
opportunities for residents to voice their concerns and for developers
to work through these issues with town officials, resulting in high
quality housing that serves community needs.

There is also evidence that the controversies surrounding the
development of the 40B projects have contributed to a better
understanding of the need for communities to provide a diverse set of
housing opportunities, particularly for town employees and lower income
households (“On the Ground: 40B Developments Before and After,”
DeGenova, Goodwin, Moriarty, Robitaille, Tufts University, 2009
http://ase.tufts.edu/UEP/Degrees/fie...al_Report.pdf)

To the extent that there are legitimate concerns about the impacts of
new housing on school costs, an innovative program being pioneered in
Massachusetts, known as Chapter 40S, will provide state subsidies to
cover any net new school costs created by new affordable housing
development, built under a companion piece of legislation known as
Chapter 40R.

So, in summary, it appears that if housing is well designed, fits in
with the surrounding neighborhood, and managed well, there are no
negative impacts of affordable housing on the property values of
neighboring single family homes. In addition, in view of the serious
need for affordable housing, the public sector can play a positive role
in providing local governments subsidies to cover any additional costs
of the new housing.