NAR Study: Subsidized Housing Impacts Neighboring Property Values Less Negatively Than Previously Thought

11/8/2002

From: Steve Cook of the National Association of Realtors, 202-383-1040, e-mail: scook@realtors.org NEW ORLEANS, Nov. 8 -- Federally subsidized housing has significantly less of a negative impact on neighboring property values than previously thought because of weaknesses in the ways experts have measured changes in the marketplace, according to a new study sponsored by the Housing Opportunity Program of the National Association of Realtors(r). The study by Dr. George C. Galster of Wayne State University is a review of existing research that found most studies suffer from severe shortcomings that render them of questionable value. However, new research is creating a new consensus that suggests assisted housing has insignificant or positive effects on property values in higher-value neighborhoods. Also, the new studies find that the severity of negative impacts on property values was directly related to the concentration of subsidized housing sites and the scale of the facilities. "These new findings could change the way we think about subsidized housing in America. It will help to lower fears that assisted housing lowers property values in surrounding neighborhoods. Better research is helping us to dispel myths about property values that have made the siting of assisted housing controversial in many communities. With a better understanding of this issue, communities all across America will find themselves in a better position to provide housing opportunities for all," said NAR President Martin Edwards, Jr. a partner in Colliers Wilkinson & Snowden, Inc., Memphis, Tenn. For the past decade, federal housing programs, especially Section 8 and HOPE VI, have resulted in the de-concentration of assisted housing for lower-income families as well as mounting opposition from property owners in many communities. Many of the studies of the impact of assisted housing on neighboring property values conducted during the 1990s suffered from inadequate controls for neighborhood characteristics, problems sorting out the direction of causation between trends in neighborhood property values and the siting of assisted housing, and the failure to systematically consider potential variations. In 1998 Dr. Galster and others developed a new, empirical approach to measure residential property impacts that measures the level and trends in home sales values surrounding assisted housing before and after it was developed and in neighborhoods where no subsidized housing was built. Studies conducted using the new methodology have found that: various forms of assisted housing have had either positive or insignificant effects on residential property values in higher value, less vulnerable neighborhoods. They have had more modest prospects to improve property values in lower value, more vulnerable neighborhoods. The impact of negative property impacts in more vulnerable neighborhoods relates directly to the size and scale of the subsidized housing project. However, Dr. Galster recommended the new methodology be replicated in many more studies before conclusions about the impacts of subsidized housing can be drawn with complete assurance NAR's new Housing Opportunity Program will empower and encourage the nation's Realtors(r) to become aggressive advocates for successful, credible and viable housing opportunity programs in their own communities. The program was launched today at the 2002 Realtors(r) Conference and Expo at the Morial Convention Center. Some 22,000 Realtors and guests are attending the convention. The National Association of Realtors(r), "The Voice for Real Estate," is America's largest trade association, representing more than 800,000 members involved in all aspects of the residential and commercial real estate industries. Information about NAR is available at http://realtor.org. This and other news releases are posted in the Web site's "News Media" section.