Neighborhood Spillover Effects Research Articles

Can landlords siphon housing allowances? New theory and evidence on housing allowance algorithms from a natural experiment

This paper provides new evidence on the incidence and theoretical predictions of housing allowances. It offers a comprehensive reexamination of allowance algorithms, to shed light on their objectives and impacts, while also addressing empirical modelling considerations and identifying limitations in literature. Notably, it offers readers a comparative analysis by investigating US vouchers as a reference point. Theoretically, I find housing allowances are typically neither a price nor income equivalent. Housing allowance schemes,mostly being universal in functional form across countries, manifest as personal subsidies inverse to resources i.e., some benefit amount minus income deduction. I discover that New Zealand's Accommodation Supplement (AS) manifests as a negative income and wealth tax benefit which, over time, is regressive to rents and incomes. Empirically, I estimate the effects of an increase in costs and demand for the AS on rents exploiting a panel of housing markets geocoded using census tracts at Area Unit (AU) level. The rent model extends, using Geographically Weighted Panel Regression (GWR) to control for any time-variant neighborhood spillover effects on rents. Costing NZ$ 5.225 billion over 2006–2013, AS for renters was not demand deterministic and had no significant direct impact on the revenues of low-income landlords. An increase in subsidy demand coincides with possible overcrowding whereas has no impact on increasing rental supply or a move into renting.

Foreclosure Contagion and the Neighborhood Spillover Effects of Mortgage Defaults

ABSTRACTIn this paper, I identify shocks to interest rates resulting from two administrative details in adjustable‐rate mortgage contract terms: the choice of financial index and the choice of lookback period. I find that a 1 percentage point increase in interest rate at the time of adjustable‐rate mortgage (ARM) reset results in a 2.5 percentage increase in the probability of foreclosure in the following year, and that each foreclosure filing leads to an additional 0.3 to 0.6 completed foreclosures within a 0.10‐mile radius. In explaining this result, I emphasize price effects, bank‐supply responses, and borrower responses arising from peer effects.

Land use, income, and ethnic diversity in the margins of Hutan Harapan – A rainforest restoration concession in Jambi and South sumatra, Indonesia

Recent initiatives at a global scale have called for unprecedented levels of forest restoration to counteract decades of rapid deforestation. This study of the first rainforest restoration concession granted in Indonesia investigates the association between land use, ethnicity, migration, agricultural intensification, concession types, and household incomes. Understanding the effect of agricultural expansion and immigration on the rural landscape requires quantification of the land use and income sources of households residing in the forest margin where dynamic agricultural, socioeconomic development and forest loss takes place. The study is based on an environmentally augmented income survey covering 236 randomly selected households in five villages and five indigenous, semi-nomadic Batin Sembilan sub-groups, scattered in and around Hutan Harapan. Land use ranges from the cultivation of subsistence food through agroforestry, home gardens, and paddy fields to the development of rubber and oil palm plantations for cash income. Indigenous households were more likely to practice agroforestry than non-indigenous households. Among non-indigenous households, Malays maintain their traditional practice of rubber cultivation while more recent immigrants use land to oil palm plantations. Households residing within timber plantation concessions are more likely to establish rubber monoculture and agroforestry, while households residing in the vicinity of oil palm concessions plant oil palm. Reserving land for forest restoration affects ethnic groups differently. The traditional agricultural practices of the indigenous Batin Sembilan were well-suited to co-exist with the forest restoration concession. However, the Batin Sembilan recently adopted oil palm cultivation as practiced by immigrants in the surrounding oil palm concessions confirming that land use outcomes may be induced by neighborhood spill-over effects.

Unending foreclosure crisis: Uneven housing tenure trajectories of post-REO properties

The purpose of this study is to explore the housing tenure trajectories of post-REO properties, with a focus on their sales processes and neighborhood spillover effects over time. This study suggests that the renter occupancy of post-REO properties in minority communities could lead to continuing negative spillover effects. Between 2006 and 2013, REO properties were geographically concentrated in low-income Black communities and moderate-income Hispanic neighborhoods in Orange County, Florida. The resale duration of the REO properties in poor African American communities tended to be longer and the post-REO properties in these neighborhoods are more likely to be renter-occupied. In spite of comparatively short resale durations for REOs in Hispanic neighborhoods, post-REO properties were often renter-occupied. The renter-occupancy of post-REO properties might reinforce racial segregation, but it could also be a source of affordable housing. Therefore, it is necessary to monitor the trajectories of post-REO properties and their spillover effects.

A simulation model of home improvement with neighborhood spillover

This paper develops a simulation model of home improvement with neighborhood spillover. The goal is to explore how the household decisions between home improvement and moving shape urban land development and housing markets, and the role of neighborhood spillover. The model is implemented based on a monocentric city framework. The existence of neighborhood spillover effects slows down the pace of urban land development, while it also significantly increases average household duration of residence and amount of home improvement investment. In practice, the neighborhood spillover effects can be considered as a form of social capital which connects homeownership and neighborhood quality. Based on the simulation results and sensitivity analysis of key policy relevant parameters (social interaction strength, neighborhood size, transportation cost), the paper further explores implications for public policymaking related to transportation, housing markets, and land use. The dynamic simulation tool developed in this paper can also be found useful in other land use, urban and regional modeling.

Foreclosure Contagion and the Neighborhood Spillover Effects of Mortgage Defaults

I identify shocks to interest rates resulting from two administrative details in adjustable-rate mortgage contract terms: the choices of financial index and lookback period. I find that a 1 percentage point increase in interest rates at the time of ARM reset results in a 2.5 percentage rise in the probability of foreclosure in the following year; and that each foreclosure filing leads to an additional 0.3-0.6 completed foreclosures within a 0.10 mi radius. I emphasize price effects, bank-supply responses, and borrower responses arising from peer effects in explaining this result.

Time and distance heterogeneity in the neighborhood spillover effects of foreclosed properties

In this paper, we examined heterogeneity in the simultaneous space-time impact of foreclosures on neighborhood property values. Foreclosures with longer foreclosure processes were associated with negative neighborhood price externalities from the time the foreclosing household still had ownership of the property and continued through the Real Estate Owned period. However, foreclosures with shorter foreclosure processes were associated with negative neighborhood price externalities that did not occur until at least three months after the foreclosure auction and were much smaller in magnitude. Results suggest a negative neighborhood effect of extending the length of the foreclosure process. Policy encouraging foreclosure “workout” efforts, which when unsuccessful extend the duration of the foreclosure process, should take these additional price externalities into account.

Hedonic Housing Prices in Paris: An Unbalanced Spatial Lag Pseudo‐Panel Model with Nested Random Effects

SummaryThis paper estimates a hedonic housing model based on flats sold in the city of Paris over the period 1990–2003. This is done using maximum likelihood estimation, taking into account the nested structure of the data. Paris is historically divided into 20 arrondissements, each divided into four quartiers (quarters), which in turn contain between 15 and 169 blocks (îlot, in French) per quartier. This is an unbalanced pseudo‒panel data containing 156,896 transactions. Despite the richness of the data, many neighborhood characteristics are not observed, and we attempt to capture these neighborhood spillover effects using a spatial lag model. Using likelihood ratio tests, we find significant spatial lag effects as well as significant nested random error effects. The empirical results show that the hedonic housing estimates and the corresponding marginal effects are affected by taking into account the nested aspects of the Paris housing data as well as the spatial neighborhood effects.Copyright © 2014 John Wiley & Sons, Ltd.

Neighborhood spillover effects between rezoning and housing price

The objective of this research was to investigate neighborhood spillover effects between rezoning of vacant parcels and housing price in the Knoxville, TN area. The study is unique in that it correctly highlights the need to analyze the dynamics of zoning structure and accommodates the neighborhood spillover effects associated with the real estate market. Results indicate that the probability of rezoning vacant land is expected to increase as housing price in a neighboring location increases. The rise in the housing price in a neighboring location implies increasing pressure on housing demand. This increased pressure on housing demand likely contributes to greater demands for residential development and commercial development that complements residential use. Currently, the major guidelines for the approval of rezoning petitions, according to the planners in the Knoxville area, are consistency with long-and short-range land use plans adopted by state, municipality, and county governments, and consistency with surrounding land use and environmental constraints, e.g., slope, flooding, and drainage. Local planning authorities can modify and update consistency measures in the current guidelines by accounting for varying degrees of housing demand pressure. For example, consistency measures can be strengthened in areas with greater housing-price increases, if preservation is desirable because these areas are likely to experience greater rezoning pressure.

Spatial producer heterogeneity in crop insurance product decisions within major corn producing states

PurposeThe purpose of this paper is to examine the spatial components of producer heterogeneity in crop insurance product selection among US corn producers and identifies neighborhood spillover or agent marketing effects in these decisions.Design/methodology/approachCounty‐level insurance and yield data are used to demonstrate that a gradual shift from yield‐based insurance to revenue‐based insurance has spatial patterns. Conventional risk variables such as yield variability, price variability, prevalence of irrigation, other crops, and yield‐price relationships play an important role in this shift and are consistently estimated only when spatial components are included. A spatial random effects model is used to also identify the impact of spatial lag effects, which include neighborhood spillover and agent marketing effects, on the share of corn acres insured with revenue‐based plans vs yield‐based plans.FindingsTheoretically consistent variables associated with risk are found to significantly influence the choice between crop revenue and yield insurance. Non‐linear parameters identify the region‐specific effects from changes in irrigation, yield price correlation, and the prevalence of corn production on insurance decisions. In addition, spatial components such as the decisions made by nearby producers and marketing drives are also found to influence decisions. These results may demonstrate the relative influence of trusted sources, such as nearby producers and insurance agents, on insurance decisions.Originality/valueTraditional risk variables are consistently estimated by controlling for spatial heterogeneity. This study also reveals the propensity of producers to rely on the opinions of other producers or agents that they know.

Hope VI Neighborhood Spillover Effects in Baltimore

A major goal of the HOPE VI (Housing Opportunities for People Everywhere) Program is to improve surrounding communities by removing physically deteriorating public housing projects—a source of concentrated poverty and crime—and replacing them with mixedincome communities. This article uses a difference-in-differences approach to determine if Baltimore’s three completed HOPE VI redevelopments had positive neighborhood spillover effects on surrounding property values. The analysis compares property sales prices in the area immediately surrounding each site before and after redevelopment to sales prices of comparable properties farther away but in the same neighborhood and at the same time. Only one redevelopment showed convincing evidence of a positive effect on property values in its surrounding neighborhood. This redevelopment was located in a less distressed neighborhood than the other two sites, adhered more closely to the mixedincome model, and implemented the project’s social and community services component through a partnership between the private developer and the tenant organization. These findings suggest that adherence to HOPE VI’s main principles of implementation and preexisting neighborhood conditions make a difference in neighborhood spillover effects and raise the question of whether HOPE VI investment is best targeted to severely distressed neighborhoods or to stable or already improving neighborhoods.

Strategic, Geographic Targeting of Housing and Community Development Resources

This article critically examines a conceptual framework for strategic, geographic targeting, an allocation model for improving efficiency in community development programs. It reviews the theoretical and empirical literature, discusses constraints and policy implications, and outlines a research agenda. Cost-savings, multiplier, and interaction effects form the core rationale for strategic, geographic targeting. Focus and neighborhood spillover effects complement these and are likely to occur more rapidly when strategic, geographic targeting is used. While the literature is largely silent on the cost-savings, focus, and neighborhood spillover effects, it supports the multiplier effect and demonstrates that it is contingent on the attainment of investment thresholds. It also identifies interventions that are likely to interact positively with programs targeting housing investment.

Nonprofit housing and neighborhood spillovers

AbstractNonprofit 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

Nonprofit Housing and Neighborhood Spillovers

Nonprofit organizations play a critical role in U.S. housing policy, a role typically justified by the claim that their housing investments produce significant neighborhood 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 ompleted 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 nondistribution 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.

Indirect Benefits of Subsidized Housing Programs

Abstract This article's review of the social science literature provides little support for the widely accepted belief that government subsidized housing programs have neighborhood spillover effects and that the programs produce indirect benefits over larger areas. In particular, the evidence on the relationship between housing programs and property values is contradictory and confusing. Of the recent HUD funded studies reviewed in this article, only one supports the existence of neighborhood spillover effects. In the Urban Homesteading Demonstration, higher investments and property values radiated out from homesteading sites during the 1970s. This program is, however, relatively unique in terms of the magnitude and visibility of improvements to individual dwellings. The preceding indicates that government subsidized housing programs will have to be justified on the basis of the direct benefits provided to participants rather than on any possible indirect effects.