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					  Measuring the Consequences of Promoting Inner City Homeownership



                    Jean L. Cummings and Denise DiPasquale
                                 City Research
                               Matthew E. Kahn
                        Fletcher School, Tufts University
                                  October 2001



Contact Author
Matthew Kahn
Fletcher School
Tufts University
Medford MA 02155.
E-mail: matt.kahn@tufts.edu
617-627-4167

Keywords: Home Ownership, Community Development


This research was funded, in part, by The Pew Charitable Trusts. The authors are
solely responsible for the analysis and conclusions contained in this paper. We
thank seminar participants at Syracuse and the January 2001 ASSA meetings for
helpful comments.
   Measuring the Consequences of Promoting Inner City Homeownership


                                       Abstract



This paper examines low- and moderate-income households in the city of Philadelphia
who are becoming homeowners for the first time. We examine two Nehemiah
developments subsidized by the City of Philadelphia that offer newly constructed homes
at well below cost. This paper uses a unique survey of these new owners to measure what
Nehemiah residents gain in terms of structure and community attributes as they make the
transition from renting to owning. The new owners in the Nehemiah complex
significantly improve their housing structures while raising their exposure to crime and
weak local public schools. As part of the City’s community development strategy, these
developments were expected to increase economic activity near these sites. We document
that there is no evidence of “local benefit spillovers” for census tracts where the
Nehemiah was built. Our survey results suggest that the new housing complex represents
an “oasis” where there are few interactions between the new home owners and the
incumbent residents of the greater community.




                                           2
I. INTRODUCTION

        Homeownership has long been the centerpiece of U.S. housing policy. As a

society, we have created many policies to promote homeownership, such as the mortgage

interest deduction for federal income tax, mortgage insurance, and direct subsidies to

lower income households. A major rationale for these policies is the conviction by many

that homeownership builds better citizens and communities by giving residents a stake in

those communities.1


        This paper examines low- and moderate-income households in the city of

Philadelphia who are becoming homeowners for the first time. The City of Philadelphia

has made a strong commitment to promoting homeownership as part of its overall

community development strategy (see OHCD 1997b). The City provides people-based

subsidies for homeownership through its Settlement Grant program, which offers

qualifying households up to $1,000 to help cover closing costs to purchase a home. In

addition, the City provides place-based subsidies, which we focus on in this paper. We

examine two Nehemiah developments subsidized by the City that offer newly constructed

homes at well below cost—West Philadelphia Nehemiah and West Poplar Nehemiah.

The Nehemiah name is taken from a federal housing program, Nehemiah Housing

Opportunity Grant Program (NHOP), which promotes homeownership. While both

projects share the Nehemiah name, only the West Poplar project actually received federal

Nehemiah funds. With these place-based programs, the hope is that the housing will


1
 There is little empirical evidence of the connection between homeownership and “good citizenship.”
DiPasquale and Glaeser (1999) find some connection between homeownership and good citizenship as
measured by involvement in local politics and nonprofit organizations. Green and White (1997) report
evidence of greater educational attainment among children of homeowners relative to children of renters.



                                                    3
provide not only quality residences for its occupants, but also stimulate new investment

in the area. Both Nehemiah developments are located in very distressed neighborhoods.

Encouraging middle class households to move to high poverty areas is an alternative anti-

poverty strategy to HUD’s Moving to Opportunity (MTO) program that encourages

public housing residents to move to better neighborhoods.2


          This paper focuses on the private and social gains from moving to these new

housing complexes. For the minority middle class households who move into these two

Nehemiah developments, what do they gain in terms of structure and community

attributes? How do these attributes differ from what they consumed as renters? Most

Nehemiah residents also receive a Settlement Grant to cover closing costs. For each

Nehemiah participant, the alternative to moving into the complex would have been to use

that grant to purchase a house elsewhere in the city of Philadelphia. We examine the

community and structure consumption choices of black non-Nehemiah households. They

represent a “control group” to help us measure the net gains from participating in the

place-based program.


          The data assembled for this study permit a unique opportunity to examine the

progress made by new homeowners in terms of structure and community quality when

they make the transition from owner to renter. We are able to measure this progress

because the City provided us with a database that includes geocodes for each Settlement

grant participant’s origin and destination census tract. This information allowed us to

assign local public goods consumption before and after the move. Unfortunately, the


2
    For an analysis of the Boston MTO program see Katz, Kling and Liebman (2000).



                                                    4
City’s database includes little information about the structure attributes that these

program participants consumed as renters or now own. To measure the structure gains,

we have conducted a survey of 400 Settlement Grant recipients, as well as 76 Nehemiah

residents, that asked detailed questions on the characteristics of the house purchased and

the quality of the neighborhood.


       By choosing the Nehemiah developments, residents move to considerably worse

communities than their renter neighborhoods. While our results indicate that the gains in

structure are larger than the losses in community quality, the estimated dollar increase in

housing consumption provided by the city to Nehemiah residents is substantially lower

than the public subsidies allocated to these projects.


       As part of the City’s community development strategy, these developments were

expected to increase economic activity near these sites. We study whether there were

“local spillovers” for census tracts where the Nehemiah was built. If these projects

generate spillovers, we would expect to see an increase in real estate prices near these

sites. We estimate hedonic price regressions to measure whether the Nehemiah’s

construction is capitalized into home prices using data on every real estate transaction

record in the city from 1986 to 1997. We found no evidence of benefits to the

surrounding community.


       Unlike previous hedonic evaluation studies, we use our new survey’s findings to

further explore why we observe little local spillovers. Our survey measures respondent

attitudes and perceptions of their new community. We find evidence consistent with the




                                              5
hypothesis that the Nehemiah complex is an “oasis”. The middle class households who

have moved to these high poverty census tracts view the new complex as their

community. If such households have few interactions with their census tract neighbors

who live out side the Nehemiah complex, and do not spend their disposable income at

local stores, then there is no possible channel through which there can be spillover

effects.


           In the next section of this paper, we give an overview of the Philadelphia housing

market. In Section III, we provide a detailed description of the Nehemiah developments

followed by an analysis of community choice in Philadelphia. In Section IV, we

examine the characteristics of Nehemiah residents and their communities. In Section V,

we measure how moving to the Nehemiah complex affects a household’s consumption of

structure and community attributes. In Section VI, we test the hypothesis that the

Nehemiah complex has improved the local communities that are adjacent to it. We

conclude with a discussion of the merits of placed-based housing subsidies as a tool in

community development.




II. TRENDS IN THE PHILADELPHIA HOUSING MARKET 1986 to 1997




           Households who moved into the new Nehemiah houses could have purchased a

home in the housing market. To understand the opportunities in this market at that time,

we look at time trends in the real price of housing throughout the City. Housing prices in

the City of Philadelphia are low relative to other large American cities. Using data from


                                                6
the Philadelphia Board of Revision of Taxation on every real estate transaction from

1986 to 1997, we estimate quality-controlled house prices. As shown in Figure 1, real

house price appreciation in both the metropolitan area and the city of Philadelphia lagged

behind the national average during the upswing of the 1990s. From 1989 to 1997, the

national average annual real house price appreciation was 4%, metropolitan Philadelphia

house price appreciation was 3%, and in the city of Philadelphia, the average was -2%

per year. Figure 1 shows that Philadelphia center city ownership has been an awful

financial investment relative to investing in the stock market as measured by the Dow

Jones Industrials. Figure 2 shows that the real average home price in center city

Philadelphia fluctuated between $40,000 and $55,000 between 1986 and 1997. The real

price of Philadelphia housing has been falling from 1989 until 1997. Figure 2 breaks out

the city’s house prices by sub-market. Each of the city’s 350 tracts is assigned to an

income group according to its income level as given by the 1990 Census of Population

and Housing. Figure 2 shows that the greatest price declines have taken place in the

richest census tracts. Note that between 1989 and 1997, the price differential between

homes in the richest tracts and the poorest tracts narrowed.




III. NEHEMIAH DEVELOPMENTS IN THE CITY OF PHILADELPHIA

       The City of Philadelphia has long encouraged homeownership as part of its

overall community development strategy. The first goal stated in the strategic plan

developed by the Office of Housing and Community Development (OHCD) of the City

of Philadelphia is “promoting homeownership and housing preservation.” The plan states

that, “to more effectively support economic development and reinvestment in


                                             7
Philadelphia, the City will continue to emphasize homeownership and preservation of the

existing occupied housing stock” (OHCD 1997b, p. 9).3


        Place-based programs such as the Nehemiah developments are designed to

encourage reinvestment in inner city communities by making investments in specific

developments. By revitalizing formerly declining central city areas, such programs may

act as a magnet, attracting households and other investments that might have left the

neighborhood in the absence of the incentives. In this paper, we focus on two housing

developments supported, in part, by the City: West Poplar Nehemiah and West

Philadelphia. Nehemiah. The Nehemiah developments offer newly constructed units to

qualified households at prices substantially lower than construction costs.


        The Nehemiah Housing Opportunity Grants Program (NHOP) is a national

program created under Title VI of the National Housing and Community Development

Act of 1987. Under the program, HUD is authorized to make grants to non-profit

organizations to provide loans to families purchasing homes that are constructed or

substantially rehabilitated in accordance with a HUD-approved program. The non-profits

sponsoring the developments are responsible for marketing and allocating the units, with

federal guidelines regulating such things as eligibility and fair housing rules. By 1998,

1,874 units had been completed nationwide; an additional 57 units were to be completed

in 1999.4


3
  For an extensive discussion of the city’s homeownership and community development strategies, see
Kromer (2000).
4
  The loans may not exceed $15,000, must be interest free, must be secured by a second mortgage held by
the HUD Secretary, and are repayable to the Secretary upon the sale, lease or transfer of the property. HUD
funds must be applied to the purchase price of the home and HUD funds may not be used to provide the
downpayment. The statute and regulations require that the eligible homebuyer make a downpayment equal
to 10% of the purchase price, unless a local or state government will hold the first mortgage under a home-


                                                     8
         The West Poplar Nehemiah project received funding from the NHOP program.

The West Philadelphia project borrows the Nehemiah name, but did not receive any

NHOP funding. Both of these new-construction projects received subsidies from the City

of Philadelphia, including direct expenditures for some land acquisition and site

improvements. West Philadelphia Nehemiah is at the corner of 46th and Market Streets,

built on a 10 ¼-acre site at the edge of University City. It is across the street from a

medical building, formerly the Institute of Pennsylvania Hospital; a tall fence separates it

from nearby public housing high-rises. The developer is the Philadelphia Interfaith

Action (PIA), a private non-profit coalition of 43 religious institutions from across the

metropolitan area.


        The West Poplar project is in North Philadelphia, a few blocks north of the

Convention Center and downtown area, at N. 12th, N. 13th, Poplar and Ogden Streets. The

site is also near Yorktown, a community in North Philadelphia of over 600 single family

homes built in the 1960s with substantial federal funds. The current development covers

over 10 acres. Related City improvements included adding and reconfiguring some

streets. The development includes a new village green and borders an existing church.


        Construction on the West Philadelphia project began in 1994 and was completed

in the fall of 1997. Households began moving into the development in 1995. As shown in

Table 1, the project consists of 135 units; 116 of the units have three bedrooms and 19

have four bedrooms. Homebuyers paid $49,500 to $52,000 for the three-bedroom units


loan program of that unit of government. If such a program provides the mortgage, the homebuyer must
pay whatever downpayment is required under that government's program (this may be less than 10%). The
grantee would need HUD approval to allow the use of the state or local government program. (Source:
Author’s correspondence with staff in the Office of Policy, Development and Research at the U.S.
Department of Housing and Urban Development.)


                                                  9
and $55,000-$56,000 for the four-bedroom units. As shown in the Table, homebuyers

paid significantly less for these homes than the cost of producing these units. The

Redevelopment Authority estimates the “bricks and mortar” costs at $75,853 per unit,

with total land costs and site improvements adding another $31,883 in costs. The total

costs of these units averaged $107,736 per unit, with sales proceeds averaging $50,878

and public subsidies averaging $56,858 per unit.


       The West Poplar project has received funding under the NHOP program as well

as additional funding from the City. The project was developed in two major phases;

construction of the 75 units in the first phase began in 1996 with households beginning to

move into these units that year. The second phase consists of 101 units with construction

expected to be completed in the fall of 2000. All the units have three bedrooms. The sales

price averages $59,881; prices for these units range from $57,000 in Phase I to $63,000

for the last units in Phase II. As shown in Table 1, the costs of producing these units are

also considerably higher than these purchase prices. The Redevelopment Authority

estimates the “bricks and mortar” costs at $121,061 per unit, with land and site

improvement costs adding $42,346 per unit (although Redevelopment Authority staff

indicate that total site improvement costs for Phase II are not finalized). The total costs of

these units averaged $163,407 per unit, with sales proceeds averaging $59,881 and public

subsidies averaging $103,526 per unit. As shown in Table 1, 14.5% of these subsidies

came from NHOP. Total costs per unit of the West Poplar development are over 50%

higher than for West Philadelphia. The public subsidies per unit are almost twice those

used in the West Philadelphia project.




                                              10
IV. COMMUNITY CHOICE IN THE CITY OF PHILADELPHIA


         Nehemiah housing units are brand new but the complex is located in some of the

highest poverty census tracts in the City. To compare community quality in these tracts

relative to the tracts that non-Nehemiah black first time home buyers choose, we have

collected information for each of the 350 census tracts in the City of Philadelphia. Each

census tract contains roughly 4000 people. We constructed data on each tract’s average

school quality, exposure to crime, distance to the Central Business District and

characteristics of tract residents.


         Table 2 reports Philadelphia residents’ exposure to different measures of

community attributes. Using 1990 Census data, we calculate the weighted average of

tract attributes using household shares as the weights. The table reports average exposure

for all people, people who live in the Nehemiah tracts, and blacks and whites separately.

We measure school quality by the average percentage of 8th graders who scored above

the state median on the state standardized math test, using the public schools serving

students in each census tract.5 We also include the average class size, using the number of

students per teacher.


         The average City of Philadelphia household lives in a census tract where 12% of

eight graders, on average, scored above the state median math score. In the census tracts


5
 These test scores are available from the Pennsylvania Department of Education website
(www.pde.psu.edu/esscores.html). The Philadelphia School Districts has 274 public schools; 90 include
eighth grade. Scores for individual schools range from 0 to 99 (three have scores above 33). Private and
parochial schools do not provide scores for these tests. Using maps provided by the school district, we
assigned each public school with an eighth grade to the census tracts they served. If a tract was served by
more than one school we assigned that tract the average of the test scores for those schools weighted by
enrollment. Regional or district-wide schools where admission is not determined by a student’s home
address, such as exam schools or charter schools, were excluded from these calculations.



                                                     11
that house the Nehemiah projects only 2.7% of eighth graders score above the state

median in math. The average white lives in a census tract where 17.3% of children

scored above the median while the average black lives in a census tract where 5.5% of

children scored above the median. Across the city, on average, there are 19.1 students

per teacher; in the schools serving Nehemiah tracts, the average class size is 19.8

students.


           Crime is measured by the average murders for 1994 and 1995 that occurred

within each census tract per thousand in population. We average the 1994 and 1995

murder rates in an attempt to mitigate the effect of a fluke tragedy in a generally safe

community. As shown Table 2, the average census tract experienced 0.28 murders per

thousand of population.6 The data indicate that households living in Nehemiah tracts are

exposed to considerably higher murder rates. The average black household lives in a

tract that has a murder rate that is four times greater than the average white but the

average black household lives in a tract that features 50% less murder than the Nehemiah

tracts.7


           A growing literature in economics and sociology has documented the positive



6
 Data are from the Philadelphia Police Department Homicide Division and are available at
www.philly.com; the information provides the address for each murder that occurred in the city. We
geocoded these addresses to get murder rates in each census tract per thousand in population.
7
  Murder may be viewed as a narrow measure of crime. We use murder because murder data are available
by address of the crime. We were able to geocode these data to construct murder rates by census tract.
These data provide a rare opportunity to examine differences in crime rates across very small geographic
areas that closely mimic neighborhood boundaries. Broader measures of crime such as violent crime or
property crime, as defined by the FBI’s Uniform Crime Reports, are available by police districts. However,
there are only 26 police districts in the city, which would force us to aggregate 365 census tracts to the
district level, losing a great deal of neighborhood detail. We used the district level data to test how well
murder works compared with broader measures of crime. Those results suggest that murder is a good proxy
for crime.



                                                    12
benefits from living near highly educated people (Case and Katz (1991), Cutler and

Glaeser (1997), Rauch (1993)). We measure the socio-economic status of neighbors by

using the tract’s percent of adults who have college degrees. As shown in Table 2, for the

average Philadelphia census tract, 18% of its population over age 24 has a college degree.

In neighborhoods chosen by Settlement grant recipients and housing the Nehemiah

developments, far fewer adults have college degrees. As would be expected, the poverty

rate in the Nehemiah tracts is much higher. The average black lives in a tract with a

poverty rate of 27.8% while the average Nehemiah tract resident is exposed to a poverty

rate of 57.9%. The average white lives in a tract featuring a poverty rate of 11.7%.


         Community quality is not just a function of service provision and neighbor

quality. Shopping opportunities and access to jobs are other relevant criteria. The

Philadelphia Board of Revision of Taxes provided an inventory of all properties in the

city (Inventory). From these data, we calculate the percent of building area in each census

tract used for commercial purposes (not including industrial uses).8 On average, 11% of

real estate in a Philadelphia census tract is commercial; in the Nehemiah neighborhoods,

29% of real estate is commercial. The impact of commercial space on a community can

be positive or negative. We expect a positive impact on community quality when basic

commercial services, such as dry cleaning, a pharmacy, a grocery store, or a local

restaurant are available. However, commercial activity not designed to serve residents

could be viewed as detrimental to community quality. We measure accessibility to the

city center as the distance in miles from the center of each census tract to the center of


8
  Some other variables that would be useful in evaluating the impact of commercial space on community
quality include such measures as vacant land and abandoned buildings as well as retail sales. Unfortunately,
these data were not available by census tract.


                                                    13
census tract 5, which houses city hall. The average census tract is 5.2 miles from city hall.

Nehemiah tracts are rather close to the city center.


        Each census tract in the City of Philadelphia differs with respect to their attributes

along the five dimensions of crime, school quality, human capital, commercial real estate,

and Central Business District accessibility. To form an index of how census tracts rank in

terms of quality, we need index weights. Such weights can be estimated from hedonic

housing regressions that yield estimates of the marginal price of purchasing a housing

attribute such as a safer community. Following our earlier work (see DiPasquale and

Kahn 1999), we estimate a City of Philadelphia hedonic home price regression as in

equation (1).




log(Priceijt) = B * Xijt + γ * Ζ jt + ε ijt                           (1)




In equation (1), the dependent variable is the log of home i’s price in census tract j in year

t. The vector X includes calendar year dummy variables and structure characteristics.

The vector Z includes census tract level characteristics.


        Our data covers every real estate transaction that took place in the city of

Philadelphia between 1986 and 1997 (Sales Journal) provided by the Philadelphia Board

of Revision of Taxation. We have full information on 146,053 arm’s length home sales.9

These data are quite limited on structural attributes. Unfortunately, they do not include


9
 Arm’s length excludes any transactions identified as those that are priced outside of the market—for
example, sales between family members, or government sales of properties seized for nonpayment of taxes.



                                                  14
information on important standard measures such as the number of rooms, bedrooms, and

baths. We know the total area of the lot, the height of the structure measured by number

of stories, and whether or not the unit has a garage. In this data, the median price of

homes purchased between 1986 and 1997 was $54,604 (in 1998 dollars).


         Table 3 reports the hedonic regression estimates. Our focus is on the ordinary

least squares estimates of γ in equation (1).10 The results for the tract-level community

attributes all impact home prices in the expected way, and all but distance to the city

center are statistically significant. A ten-percentage point increase in the percent of the

population with college degrees increases prices by 21.3%. Increasing the portion of 8th

graders scoring above the state median in math by 10 percentage points increases home

prices by 12.6%. Increasing class size by one student decreases house prices by 2.4%.11

As expected, an increase in crime, measured by murders, results in a decrease in house

prices; an increase of one murder per 1,000 in population decreases house prices by

60.6%. This may seem like a very large impact, but one murder per thousand in

population is a large increase in murders. Given that the average census tract has 4,000

households, our results imply that an increase of one murder in this average tract would

decrease home prices by 15%. A 10 percentage point increase in the portion of real estate

that is commercial in the tract raises house prices by 2.9%. A one-mile increase in the

distance from the center of the city increases home prices by 1.3%, but this estimate is

not statistically significant.


10
   For a more detailed analysis of the structure hedonic coefficient estimates see the longer report
(Cummings, DiPasquale and Kahn 2001). This hedonic approach for ranking community quality is quite
similar to the approach used by Gyourko and Tracy (1991).
11
   Black (1999) also finds a positive impact of schools on home prices, although her estimates are smaller
than ours. Her models are based on data on suburban school districts in Massachusetts.



                                                    15
        To form our measure of community quality, we take the OLS estimates of

equation (1) and log-linearize the coefficients. Defining p as the marginal price of a

community attribute (such as schools) and the characteristics of community as Z, we

calculate the sum of p*Z. Based on this method, Philadelphia’s three best communities

are Society Hill, Washington Square and Olde City while the three lowest ranked

communities are Ludlow, Mantua and 5th and Lehigh. In Map 1, we map the community

quality index and the location of the two Nehemiah complexes. The map highlights two

points. First, there is enormous heterogeneity in this city’s quality of life. Second, the

Nehemiah complexes have been built in two of the lowest ranked communities in the

city.




V.      WHO ARE NEHEMIAH HOME BUYERS AND HOW DO THE

        NEHEMIAH AREAS COMPARE TO THE REST OF THE CITY?


        Up to this point, we have used traditional data sources to measure how Nehemiah

tracts compare to other areas in the city and to estimate the marginal price of purchasing a

better community. We are especially interested in how a family’s quality of life is

affected by switching from renting to owning. This “before/after” comparison requires

special data. We have data on over 8,000 households that participated in the Settlement

Grant program. For each of these households we observe some demographic attributes




                                              16
and the census tract the household chose. For roughly 4000 of these households, we also

know their origin census tract.12


        Table 4 presents some basic demographic information on over 8000 new

Philadelphia home owners who participated in the Settlement Grant program. This

includes 86 grant recipients who bought homes in either the West Philadelphia or West

Poplar Nehemiah projects. All 86 grant recipients living in these projects are households

headed by African Americans. As shown in the Table, females head 75.6% of these

households. When they purchased their homes, these households had a median household

income of $25,379 (in 1998 dollars), which is 30.5% higher than the median income of

Settlement Grant recipients. They paid $49,129 for the homes and made a downpayment

of $1,280, on average.


        Table 5 reports community average attributes for Nehemiah and non-Nehemiah

households (broken out by race) in the origin and destination areas. Over 90% of

Nehemiah households changed census tracts when they moved to these developments; on

average, they moved 2.2 miles from their previous homes, farther than the average

Settlement Grant household. The 76 households that changed census tracts when they

moved came from 54 census tracts. As shown in Table 5, Nehemiah residents, on

average, came from significantly better neighborhoods than their new owner neighbor-

hoods. The census tracts that house the Nehemiah developments have populations with

considerably lower incomes, lower house values, less education, and lower

homeownership rates than the origin tracts for these households. The Nehemiah

12
  Newberger (1999) worked with a subset of this data set to explore search method differences between
whites and blacks and to document the income and racial attributes of the census tracts that program
participants were entering and exiting.


                                                   17
households moved to census tracts that were much more racially segregated and in which

no more than 3.5% of the population was white. Black non-Nehemiah households move

to much whiter tracts, that are further from the city center.


       Table 6 repeats the results presented in Table 2 but now focuses on the local

public goods consumption for Settlement Grant participants. Note that Table 2 is based

on the population of the entire City in1990. Relative to other black Settlement Grant

participants, new owners in the Nehemiah complex are exposed to poor schools, a three

times greater murder rate, 50% less college graduates as neighbors and are significantly

closer to the center city. Nehemiah tracts do feature significantly more commercial real

estate than the tracts where the average non-Nehemiah black resides.


       To study how the transition from renting to owning affects black versus white

consumption of local public goods, in Table 7 we report mean consumption before and

after the move. Through switching tenure and community, blacks significantly increase

the quality of their local schools and reduce their exposure to murder. White households

also move to areas with slightly better schools and lower crime. Despite the fact that

settlement grant recipients have roughly equal income, new white owners live in census

tracts featuring better schools, and much lower murder rates than blacks. Tables 5 and 6

showed that Nehemiah tracts feature low quality community attributes.


Constructing the Nehemiah complex would have little value added if the households who

chose to move to the complex would have moved to the Nehemiah area census tracts

even without the subsidy. If new homebuyers do not want to live in these tracts, then the

only way to recruit middle class households to live there is to provide deep subsidies. In




                                              18
1990 there were 25 tracts in the city of Philadelphia where the population was over 25%

black and over 25% of the population has a college degree. This suggests that middle

income black households could chose to migrate away from high poverty minority areas.

To measure the probability that a Settlement Grant participant would choose to move to

the Nehemiah tracts (without a place-based subsidy), we estimate a 204 dimensional

discrete choice model of household choice of census tract.13 We estimate a conditional

logit model to explain the probability that a black household chose a particular census

tract. We model tract choice as a function of its racial composition (percent of residents

who are black), income (the percent of its residents living in poverty) and educational

attainment (the percent of residents who are college graduates).


         In Table 8, we report two sets of estimates of this conditional logit model.14 In

the second set of estimates, we interact the census tract attributes with the household’s

income. Based on the results in the right columns of Table 8, we predict that a black

household with an income of $15,000 has only a 1.1 percent probability of moving to a

Nehemiah census tract while the black household with an income of $40,000 is predicted

to have an even smaller (0.11 percent) likelihood of moving to these tracts. This shows

that black middle class households would not chose to move to the Nehemiah general

area without a deep subsidy.




13
  Since the households in the Settlement Grant program are lower-middle class, we restrict the choice of
the 350 tracts in the City of Philadelphia to the set of 204 census tracts whose median home price in 1990
was less than $60,000 ($1990).




                                                    19
VI.     SURVEY OF NEHEMIAH RESIDENTS AND SETTLEMENT GRANT

        RECIPIENTS


        The previous section used the City of Philadelphia’s database to examine the

community choices made by Nehemiah households and by Settlement grant households.

Unfortunately, the database includes no information on the home’s physical attributes.

Using information from the Settlement Grant program and the Nehemiah housing

developments, we surveyed 476 households (400 Settlement Grant recipients and 76

Nehemiah residents). This survey provides more detailed information on structure and

community characteristics than standard census data. Unlike census-based or American

Housing Survey studies, our survey provides a detailed picture of the quality of life for

new homeowners before and after the move, identifying how much households upgrade

their housing structures and their communities.


        Between November 1998 and January 1999, The Response Center, a Philadelphia

based market research firm, called both Settlement Grant and Nehemiah households to

conduct the survey. This firm followed standard procedures in sampling from a list of

potential survey participants provided by City Research (Response Center 1999). The list

included all Settlement Grant recipients between 1993 and 1997, as provided by the City

program, for whom phone numbers could be found. From this list, households were

randomly selected to be called with equal weights placed on each household’s probability

of being called; surveys needed to be completed by a respondent who identified

him/herself as a primary decision-maker in buying the home. Households were called


14
  The conditional logit model is a standard limited dependent variable model estimated using stata’s clogit
command based on maximum likelihood.


                                                    20
until we reached a target goal of 400 completed Settlement Grant surveys. In addition, we

had a list of 140 Nehemiah residents for whom phone numbers could be found, taken

from a 1998 end-of-year list of homeowners, provided by the two Nehemiah projects; the

Response Center made at least one attempt (usually 3 to 5) to reach each of these

households. The survey took an average 26.8 minutes to complete. Of the Settlement

Grant recipients who answered the phone, 39% completed the survey. Of Nehemiah

households who answered the phone, 74% completed the survey.15 This survey

participation rate was higher than the usual rate for other studies conducted by The

Response Center.16 In order to get a reasonable sample size for our analysis, we over-

sampled the Nehemiah residents because the total number of project residents was small.


        In Table 9, we report basic demographic summary statistics for Nehemiah and

non-Nehemiah households. In our survey, 23% of Settlement Grant households are white,

57% are black and 12% are Hispanics, as shown in Table 9. Another 8% are other race or

did not identify race.17 The average household has 3.4 members; 79% have children

under age 18. Settlement Grant recipients in our survey have a median income of

$27,500; median income for white households is $32,500, $27,500 for black households

and $22,500 for Hispanic households. As shown in Table 9, these households had a

median household income of $37,500, 36% higher than the incomes for the average black

Settlement Grant recipient. The median house prices and downpayment amounts are also

15
   476 households completed the survey. An additional 243 households refused at the onset to participate,
another 191 refused due to language difficulties, 75 refused claiming that they were not the household
decision maker, and 30 more hung up during the survey. An additional 100 refused because they claimed
that they did not receive a Settlement Grant, even though the OHCD data indicate they did receive a grant.
16
   We had the opportunity to listen in on over ten phone calls to potential respondents. We were struck by
the willingness of these new homeowners to discuss their tenure transition.
17
   Household race is defined as the race of the person taking the survey, who by definition was a key
decision-maker in buying the home.



                                                    21
significantly higher than those for grant recipients. Nearly 94% of Nehemiah households

paid for the downpayment with savings; none reported assistance from friends or family.

On average, 28% of adults in these households have completed at least some college.

(This compares with 12% for all Settlement Grant recipients, and 19% for black

Settlement Grant recipients.) The average household size is 2.8, with 58% of these

households having children under age 18; 45% are female-headed households. Of the 76

survey respondents living in the Nehemiahs, 75 indicated that they are black and 1

refused to provide her race.


       Table 10 reports the means for housing structure attributes that Nehemiah

households consumed as renters versus as owners. These households increased the

number of rooms, bedrooms, and bathrooms, and most gained off street parking and

central air conditioning by moving into the Nehemiah complexes. To compare to the

Nehemiah household gains relative to the gains of black Settlement grant households, we

turn to Table 11. Table 11 provides statistics describing the housing structures purchased

by Settlement Grant recipients surveyed. These households paid a median price of

$39,493 for their homes, though white owners paid nearly $10,000 more than black or

Hispanic owners. The average house has 7.6 rooms, 3.0 bedrooms, and 1.3 bathrooms.

Black owners have slightly larger homes by these measures than whites or Hispanics. The

vast majority of homes are older than 20 years and are single-family attached houses for

all races. Only 11% of these units have air conditioning and 42% have a garage; the

figures are very similar across races. 21% of those surveyed complained about structural

defects such as leaks; whites were more likely to report problems with leaks or electrical




                                            22
problems than blacks or Hispanics. Virtually all Settlement Grant recipients and

Nehemiah households surveyed are satisfied with their new homes.


       While Nehemiah households enjoy structure gains, they have made community

sacrifices. Evidence that they have moved to worse communities is presented in Table 12.


Nehemiah residents surveyed certainly indicate that they have problems with the location.

Only 26% of residents rated the local schools as good; 66% have taken precautions

against crime and 84% indicate that litter and abandoned buildings are a problem. Even

with these problems, 65% of Nehemiah households said that they were satisfied with

their neighborhood, the same percentage as that for Settlement Grant recipients. This high

rate of neighborhood satisfaction, given the low satisfaction with local schools,

neighborhood aesthetics and crime control, may be due to several factors. A smaller

portion of Nehemiah households have school-aged children than Settlement Grant

households, which may decrease concern over school quality. In addition, over half of

Nehemiah residents indicated that it was very important to them that their new home was

in a development with lots of new homes. These households may view their

neighborhood primarily as the Nehemiah development and see the surrounding area

included in the census tract as less important.


        Evidence that black Settlement grant households are improving their

communities is presented in Table 13. Households in our survey chose neighborhoods

with higher average household incomes, higher house values, and lower poverty rates

than their previous communities (although white households saw little increase in

neighborhood income). On average, households moved to communities with whites




                                             23
representing a larger fraction of the total population than in their previous communities.


        While Nehemiah households clearly gained more housing structure amenities

from becoming homeowners than their Settlement Grant counterparts, they moved to

communities with far fewer neighborhood amenities. Comparisons of Nehemiah and

Settlement Grant neighborhoods indicate that Nehemiah neighborhoods have much

greater poverty rates and considerably lower average house prices, income, and

homeownership rates. Their new neighborhoods are more segregated; unlike the

neighborhoods of Settlement Grant recipients, the Nehemiah communities are virtually

all black.


        Nehemiah offers a mixed opportunity; excellent structure in a low quality of life

community. Given the large subsidy provided to Nehemiah residents, is purchasing a

home in these developments a good deal? What is the market value of these homes? We

can estimate the market value using the statistical model from our survey similar to the

model we estimated in Table 3 using the sales transaction data. While the sales

transaction data provides a larger sample, they have limited structure characteristics. One

advantage of our survey sample is that we collected considerably more information on

structure characteristics. Table 14 presents this survey based hedonic which we use to

estimate the price the Nehemiah homes. Our price estimates indicate that, all else being

equal, the average estimated market value for the Nehemiah homes is 23% less than the

average purchase price of these homes. These results imply that even with the deep

subsidies provided, the portion of costs paid by Nehemiah residents are considerably

more than the market value of the homes.




                                             24
       Why would these residents pay a premium to live in these homes? These homes

offer a quite unique housing opportunity in the city of Philadelphia. There are very few

opportunities to live in a new home in a new development. Because these homes are so

unique our model may underestimate the value of new construction in a new

development. In addition, new residents may have an expectation that the community is

on the rise and thus current crime levels and school quality levels are not reflective of

where the community will be in a few years. Residents may expect that the placement of

the Nehemiah complex will upgrade the community through increasing local purchasing

power and this in turn will attract new commercial activity.


       While our data indicate that it is costly to choose to live in Nehemiah, as

measured by the possible gains from living in other communities, it is possible that

Nehemiah households have not engaged in an intensive search and thus “do not know

what they are missing”. Our survey asked households how many homes were considered,

in how many neighborhoods, and whether they looked in the suburbs and what

information sources they used in their search. Table 15 shows some summary statistics on

where households searched for new homes. In our survey, 15% of Settlement Grant

households looked at homes in the suburbs. While about 14% of blacks and whites

searched in the suburbs, only 8% of Hispanic households looked in the suburbs. 26% of

Nehemiah households, though, looked in suburbs.


       There are differences across households in how many homes they saw during

their housing search. The average Settlement Grant household looked at 7.1 homes, with

white, black, and Hispanic households looking at 8.0, 7.1 and 6 homes, respectively.

Nehemiah residents looked at only 4.3 homes. On average, Settlement Grant households,


                                             25
regardless of race, looked at homes in only one or two neighborhoods.


       In our survey, 70% of Settlement Grant households used realtors, 26% used

friends and relatives, 24% used newspapers, 9% used neighborhood organizations, and

9% used the Settlement Grant program’s housing counselors. There is some variation in

these search methods across races. Black and Hispanic households were more than twice

as likely as whites to use a counselor (around 10% versus 4%). Nehemiah households

were considerably less likely to use realtors. They were much more likely to use

friends/relatives, newspapers, neighborhoods organizations, and churches in their search.

This is not surprising given that both Nehemiah projects were developed by nonprofit

community organizations that relied heavily on church networks to market the

developments.


       The differences in search may, at least in part, explain why Nehemiah households

chose to their homes despite the obvious problems with their locations. The presence of

discrimination in the housing market could also explain their locational choice. If

minority households feel constrained in terms of their housing options, the Nehemiah

developments would be more attractive. Our data provide no direct test of housing

market discrimination. In our data, we found no evidence of the presence of price

discrimination. Since housing discrimination can take many forms, we cannot determine

the extent to which discrimination influenced the housing choices of Nehemiah residents.




                                            26
VII. MEASURING THE SOCIAL BENEFITS OF NEHEMIAH


       As shown in Tables 10 and 12, Nehemiah households sharply changed their

housing consumption upon making the transition from renter owner. Based on the

hedonic price regression reported in Table 14, we calculate that through subsidizing the

Nehemiah development, the City has increased housing consumption of Nehemiah

residents by $10,496.18 This increase is quite small relative to the per-unit subsidies

reported in Table One. This means that the City could have achieved the same increase in

Nehemiah participant housing consumption at much lower cost if it had simply given the

program participants a cash rebate of $10,496 to spend in the Philadelphia housing

market. The City did not chose this option because it views Nehemiahs as playing an

important role in redeveloping low quality of life communities. Thus, an important

policy question is whether these Nehemiah projects have had a positive impact on the

areas surrounding these developments. For the typical household who lives just outside

the Nehemiah areas, has their quality of life been improved by the presence of these

projects?


       A possible benefit for local residents near these developments is the impact of

having new residents with incomes significantly higher than the average incomes in the

neighborhood. Nehemiah residents have incomes that are on average close to three times

that of the census tract median household income. Potentially, the presence of these

residents could attract better commercial and shopping opportunities. There has been

little evidence of this. To document this, we have used City of Philadelphia deeds data on




                                            27
the price and quantity of real estate transactions by census tract by year. If more

properties changed hands at a higher price in the Nehemiah tracts after the construction of

Nehemiah than in the pre-Nehemiah period (1987-1994 in our data), we would conclude

that the Nehemiah development provided external benefits to nearby residents.


         Through our analysis of the real estate transaction data, we have found no

evidence that as the Nehemiah projects were built and sold that there was a growth in

commercial real estate transactions or values in or adjacent to the Nehemiah census

tracts.19 In fact, we find that the level of real estate activity and the trends in real estate

prices in the Nehemiah tracts resemble those in other poor tracts in the city.


         To more carefully document this fact, we estimate hedonic home price regressions

to compare price appreciation in Nehemiah census tracts versus two sets of control tracts.

The first control group is the set of census tracts that have poverty rates greater than 50%

and are located more than 1.2 miles away from the nearest Nehemiah census tract. We

chose this group in order to compare trends in the Nehemiah area to other poor tracts in

the city. These tracts are similar to the Nehemiah tracts in terms of poverty rates but far

enough away that they are unlikely to be influenced by the Nehemiah developments. The

second control group is the set of census tracts that share a border with at least one

Nehemiah tract. By definition, these tracts are very close to the Nehemiah tracts and may

18
   This calculation is based on calculating the market price of each housing attribute and multiplying this by
the change in each housing attribute upon moving to the Nehemiah complex. Defining p as the marginal
price and ∆q as the change in housing consumption, we calculate p*∆q and sum over the housing attributes.
19
   Specifically, there have been virtually no private market commercial transactions in the data for property
in the census tracts of the Nehemiah developments, or in adjoining and nearby tracts. There were a handful
of non-market commercial transactions in the adjacent area (e.g., a $1 transaction), but the level of these
kinds of transactions remained constant. During a tour of the Nehemiah projects and their surrounding
areas we observed two recent commercial developments near the West Philadelphia project that included a
grocery store and a drug store. In the area surrounding the West Poplar development there was a new drug



                                                     28
represent the best control group. We estimate two hedonic regressions using the Sales

Journal micro data that have the following form;




log(Priceijt) = B * Xijt + γ * Ζ jt + Nehemiah + control + U                              (2)

In equation (2), the dependent variable is the log of home i’s price in census tract j at time

t. In this equation, X represents a set of year dummies, community attributes, and

structure attributes identical to the set discussed in Table 3 using the same data. The

results are presented in Table 16. The major difference between the results in Table 3

and Table 16 is that we have added four dummy variables. One dummy variable equals

one if the property lies in a Nehemiah tract and zero otherwise (called Nehemiah). The

other dummy variable is an indicator of whether the property lies is a control tract. Both

the variable “Nehemiah” and the variable “control” are interacted with a time dummy

“post” that indicates whether the Nehemiah complex has been built. We test the

hypothesis that the Nehemiah tracts experienced greater appreciation than other high

poverty tracts during the same time period. As shown in Table 16, a quality-adjusted

home in the Nehemiah tracts has increased in price by 12% after the Nehemiah complex

was constructed. The coefficients on control group #1 (the distant high poverty tracts)

shows an increase in price of 22.3% relative to the same tracts before the Nehemiah was

built. This indicates that relative to other high poverty tracts that the Nehemiah poverty

tracts appreciated by less than similar tracts once the Nehemiah complex had been built.

Turning to the regression on the right side of Table 16, Nehemiah tracts homes increased

by 11.7% post-Nehemiah while bordering census tract houses increased in price by 9%.


store. Still, these commercial activities were too limited to have a noticeable impact on census tract real



                                                      29
We cannot reject the hypothesis that these two estimates are the same. This price test

provides no evidence of a residential price effect. As a robustness test, we have estimated

these same regressions using census tract fixed effects rather than our community

measures and we find the same results.


      Why have we found such a small impact of Nehemiah on adjacent property prices?

Some have argued that it may be too soon to see the impacts of these projects on

commercial real estate prices. However, since these developments are occupied, we

believe that the forces influencing neighborhood property values are greatest when the

developments are new. In our survey, a major attraction to buyers of these units was that

they were new and part of a new development. As they age, these properties may well be

less likely to generate new activity.20 It is possible that the Nehemiah complexes have a

positive effect on real estate prices in their immediate surroundings. Ellen, Schill,

Schwartz, and Susin (2001) find that Nehemiah developments in New York City have a

positive impact on house prices in small concentric circles (i.e. ¼ mile radii) around the

developments. We focus on the census tract impact of new Nehemiah construction

because in the Nehemiah complex census tract areas, there are very few housing

transactions taking place. Post-construction of Nehemiah, there were only 23 transactions

between 1995 and 1997 in these areas. Measuring the total effect on adjacent census


estate markets.
20
   To explore this point further, we examined real estate prices in and surrounding the Yorktown
community, which is often cited as a successful inner city development. Yorktown was developed in the
1960s and early 1970s (OHCD 1996). Using our sales transaction data for 1986-1997, we examine the
impact of Yorktown on the surrounding area 20 years after the development was opened. We find that
house prices in Yorktown have been flat over the period. Looking at the census tracts surrounding
Yorktown we find no impact of proximity to Yorktown on real estate prices in neighboring areas. This
evidence suggests that there are no benefits associated with proximity to Yorktown to the surrounding
communities as Yorktown has aged. We do not, however, have comparable data to analyze trends during
earlier years.



                                                  30
tracts captures the impact of this development on thousands of the households. If this

program had a local “macro” impact, this approach would capture this while if the

Nehemiah program raises a single block’s value then the census tract as a whole will not

experience much appreciation. It is also possible that the New York Nehemiahs have

more of an impact because the local economy is booming. The Nehemiah developments

may eliminate blight in areas with potentially valuable land. However, Lee, Culhane, and

Wachter (1999) find modest positive impacts of FHA housing and Section 8 new

construction on nearby areas in the City of Philadelphia. Again, this research examines

small concentric circles around the developments. In addition, many of the units

developed under these programs are in considerably better neighborhoods than the

Nehemiahs examined in this paper. It is possible that the Nehemiah developments are

too small to have a significant impact on such devastated neighborhoods.


     Hedonics based research is a useful tool for establishing the dynamics of real estate

prices in the presence of “treatments” such as the construction of the Nehemiah complex.

Such an approach cannot answer the question of “why” does a particular urban renewal

program work or not work. We use our survey to dig deeper into why the Nehemiah

complex has not had a larger impact on its greater community.


     One possible reason why the Nehemiah has so far had little impact on the

surrounding community is that the Nehemiah complex owners have few social

interactions with their high poverty neighbors. They may have little impact on the

commercial activities in the community if they do not shop there or pursue local

amenities such as restaurants. In terms of social interactions, neighborhood children

could benefit from interacting with children from the Nehemiah complex. Playing,


                                            31
studying or socializing with children from higher income, more educated families could

result in role models that these children would not have access to if the Nehemiah

development did not bring these families to the community. This peer group effect would

be minimized if Nehemiah residents discouraged their children from playing with

children from the community or if the Nehemiah children attend schools outside of the

community. While we do not have time diary data on how households allocate their time,

we have collected data on the propensity for survey respondent children to attend local

public schools. An important fact is that Nehemiah residents are less likely to have

school-age children than the average black Settlement Grant survey participant and those

Nehemiah residents with children are less likely to have their children attend the local

schools. Only 58% of Nehemiah households have school-age children, while 79% of

Settlement Grant residents have school-age children. Nearly 60% of Nehemiah

households with children send them to the local public schools while 79% of Settlement

Grant households send their children to local public schools. This is suggestive evidence

that there will not be a large child-to-peer-group effect for local children who live in the

Nehemiah vicinity but not in the complex. There are not that many children among the

Nehemiah residents and these children are less likely to attend local public schools. This

suggests that Nehemiah households may be less concerned about the quality of local

schools and, therefore, willing to locate in the Nehemiah developments where they know

that local school quality is low.


       Nehemiah households may define their communities in terms of the other

residents of these developments rather than the larger surrounding community. To study

this “oasis effect”, in Table 17 we report results from twelve separate probit models. The



                                             32
reported coefficients represent marginal probabilities using stata’s dprobit option. The

first six probit models focus on how Nehemiah residents perceive the quality of their

community as compared to non-Nehemiah residents’ impressions. The omitted category

in these regressions is white non-Nehemiah resident. Nehemiah residents recognize that

the schools and the shopping in their area are awful. Relative to a Settlement grant black

respondent, the average Nehemiah respondent is 27 percentage points less likely to claim

that the local schools are good and is 45 percentage points less likely to claim that local

shopping is good. Perhaps more interestingly, relative to the observationally identical

black Settlement Grant respondent, the Nehemiah resident is 6.6 percentage points more

likely to say that neighbors are helpful and is 12 percentage points less likely to announce

that there is undesirable street activity in the community. This is suggestive evidence of

the “oasis” effect. Despite the fact that tracts with higher murder rates have statistically

significantly higher levels of undesirable street activity (see column 6) and that Nehemiah

tracts have high crime, the average Nehemiah resident views the complex not the area as

the “community”.


       The last six columns of Table 17 report crime self-precaution strategies. Note that

in these models, we control for the census tract’s murder rate. All else equal, people who

live in high crime areas avoid public transit, are less likely to go out alone, and are more

likely to own an alarm and not go out at night. Again, we find some evidence of a

Nehemiah complex “oasis” effect. Despite the fact that they live in a high crime area,

Nehemiah households are less likely to avoid public transport and more willing to go out

at night than other black households in equally high crime areas who do not live in the

complex.



                                              33
VIII. CONCLUSIONS


       The City of Philadelphia has made a substantial commitment to promoting

homeownership. In this paper, we take a detailed look at the transition from renter to

owner for low- and moderate-income households who have participated in two major

Philadelphia homeownership programs. Our ability to examine the housing structures and

neighborhoods of the same households as both renters and owners allows us to observe

the progress these households made by becoming homeowners.


       For Nehemiah households, their gains in housing structure come at a substantial

cost to them through a marked decline in community quality of the surrounding area from

their previous neighborhood. Our survey results indicate that Nehemiah households

recognize the problems with their location but seem to view the gains in structure as

worth the cost. In part, their view of this trade-off may be due to the fact that these

households seem to define their community as the Nehemiah development itself, rather

than as the larger area around their homes. We find no evidence that these developments

have spurred private investment or raised home prices in nearby areas. It is possible that

the Nehemiah development’s scale is too small to have an impact on its surrounding

community. While the Philadelphia Nehemiahs have not impacted their local

community, there is evidence that similar developments have had positive impacts on the

surrounding community in New York City. Future research should investigate the

conditions in the local economy that might explain these differences.      We hypothesize

that a local area would experience the largest increase if the local economy is booming

and an area with potentially valuable land has not been developed because of some

reversible blight such as a Brownfield or abandoned buildings. In addition, future


                                              34
research should explore the extent to which project scale or the initial condition of the

neighborhood influence the size of the impact of place based subsidies on surrounding

communities.


       To revitalize high poverty communities, alternative types of place-based subsidies

should be considered. The Nehemiah projects have provided deep subsidies to a small set

of households. It is possible that other place-based programs, such as land clearance and

site improvement (mirroring the Environmental Protection Agency’s Brownfields

program), could achieve the goal of urban renewal at a lower cost to the City and provide

more widely distributed benefits. Consideration should also be given to the trade-off

between using scarce subsidy dollars for homeownership programs versus using those

dollars to improve community quality through programs that reduce crime, improve

schools, or increase retail activity. Improvements in community quality should increase

demand for housing in these communities and have a direct immediate benefit for the

families already living there.




                                             35
                                   REFERENCES


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Education. Quarterly Journal of Economics 114(2): 577-599.
BUREAU OF THE CENSUS. 1993. 1990 Public Use Microdata Samples Codebook. Chapter
5 and Appendices. Washington, D.C.: The Bureau of the Census. Revised June 1993.
Case, Anne and Larry Katz. 1991. The Company You Keep: The Effect of Family and
Neighborhood on Disadvantaged Youth. NBER Working Paper 3705.
Cutler, David and Ed Glaeser. 1997. Are Ghettos Good or Bad? Quarterly Journal of
Economics 112(3): 827-871.
DiPasquale, Denise and Ed Glaeser 1999. Incentives and Social Capital: Are
Homeowners Better Citizens? Journal of Urban Economics 45: 354-384.
DiPasquale, Denise and Matthew Kahn. 1999. Measuring Neighborhood Investments: An
Examination of Community Choice. Real Estate Economics, 27(3): 389-424.
Ellen Ingrid Gould, Michael Schill, Amy Schwartz and Scott Susin. "Do
Homeownership Programs Increase Property Values in Low Income Neighborhoods?"
forthcoming in Journal of Housing Research.
Green, Richard and Michelle White. 1997. Measuring the Benefits of Homeowning:
Effects on Children. Journal of Urban Economics 41(3), 441-461.
Gyourko, Joseph; Joseph Tracy, Joseph. 1991. The Structure of Local Public Finance and
the Quality of Life. Journal of Political Economy, vol. 99, no. 4, August, pp. 774-806
HUD (DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT). 2000. FY 1998 Income
Limits. Washington, D.C.: www.huduser.org.
Katz, Lawrence, Jeffrey Kling, and Jeffrey Liebman. Moving to Opportunity In Boston:
Early Results of a Randomized Mobility Experiment. NBER Working Paper 7973, 2000.
Kromer, John. 1999. Neighborhood Recovery: Reinvestment Policy for the New
Hometown. New Brunswick, NJ: Rutgers University Press.
Lee, Chang-Moo, Dennis P. Culhane, and Susan M. Wachter. 1999. The Differential
Impacts of Federally Assisted Housing Programs on Nearby Property Values A
Philadelphia Case Study. Housing Policy Debate Volume 10(1) 75-97.
Newburger, Harriet. 1999. Mobility Patterns of Lower Income First-Time Homebuyers
in Philadelphia. Cityscape: A Journal of Policy Development and Research 4(3): 201-
220.
OFFICE OF HOUSING AND COMMUNITY DEVELOPMENT (OHCD). 1996. Learning from
Yorktown. City of Philadelphia Report.


                                          36
OFFICE OF HOUSING AND COMMUNITY DEVELOPMENT (OHCD). 1997a. Settlement Grant
Program: Philadelphia Neighborhood Homebuyers. City of Philadelphia Report.
OFFICE OF HOUSING AND COMMUNITY DEVELOPMENT (OHCD). 1997b. Year 23
Consolidated Plan (Fiscal Year 1998). City of Philadelphia Report: 9.
Rauch, James. 1993. Productivity Gains from Geographic Concentration of Human
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RESPONSE CENTER. 1999. The Housing Study Methodology. Correspondence from Dan
Margherita and Eleanor Sivick, The Reponse Center, Upper Darby, PA, July 1999.




                                        37
                                                   Figure 1
                                   Rates of Return For Housing and Stocks

                     30%


                     20%
    Average Annual
     Growth Rate




                     10%


                      0%


                     -10%
                            78      80       82       84      86     88      90       92       94          96   98
                                                                     Year

                        Dow Jones Industrial Average                   National House Prices
                            Philadelphia Metropolitan House Prices     City of Philadelphia House Prices


Note: Data are presented as three-year moving averages.
Sources: Dow Jones Industrial Average provided by Dow Jones; National and Philadelphia metropolitan
area indices from Freddie Mac/Fannie Mae series; City of Philadelphia from authors' calculations from
Sales Journal data, City of Philadelphia.
                                                               Figure 2
                                                  House Prices in City of Philadelphia
                                                       from 1986-1997 (1998$s)

                   $100,000



                    $80,000
     House Price




                                                                                                                                 Richest Tracts
                                                                                                                                 2nd Richest Tracts
                    $60,000                                                                                                      2nd Poorest Tracts
                                                                                                                                 Poorest Tracts
                                                                                                                                 All Tracts
                    $40,000



                    $20,000
                              86   87   88   89       90       91          92   93       94       95      96       97

                                                                    Year



Source: Authors' calculations on 146,053 households with data on all variables, from Sales Journal data, City of Philadelphia.
Table 1
Nehemiah Projects
                                                    West Philadelphia (PIA)                                                West Poplar                                     Total for Both Projects
                                                                                                                 Phases I (75 units) & II (101 units)
                                                       Total Number of Units = 135                                 Total Number of Units = 176                              Total Number of Units = 311

                                           No. of                                                       No. of                                                   No. of
                                            Units        Per Unit                   Totals               Units       Per Unit                 Totals              Units      Per Unit                Totals
COSTS
  Bricks and Mortar                           135                                                         176                                                      311
      Construction                                  67,053                9,052,161                              104,050             18,312,743                           87,990             27,364,904
      Prof. & Mgt                                    4,692                  633,395                               13,823              2,432,800                            9,859              3,066,195
      Holding Costs                                  3,096                  417,968                                1,257                221,240                            2,055                639,208
      Financing Costs                                1,012                  136,587                                1,932                339,970                            1,532                476,557
  Bricks and Mortar Subtotal                                    75,853                   10,240,111                        121,061                  21,306,753                     101,437                  31,546,864

   Land and Site Improvements
      Public Improvements*                          19,259                2,600,000                                4,602                810,000 *                         10,965              3,410,000 *
      Land Acquisition                              12,624                1,704,250                               37,744              6,642,860                           26,840              8,347,110
   Land and Site Subtotal                                       31,883                    4,304,250                         42,346                   7,452,860                      37,804                  11,757,110

TOTAL COSTS                                                   107,736                   14,544,361                         163,407                  28,759,613                     139,241                  43,303,974

RESOURCES
   SALES PROCEEDS
      Unit Type
      3 Bedrooms                               58   49,500                2,871,000                        64     57,000              3,648,000                           20,961              6,519,000
                                               39   50,500                1,969,500                        11     60,000                660,000                            8,455              2,629,500
                                                8   51,000                  408,000                        44     60,000              2,640,000                            9,801              3,048,000
                                               11   52,000                  572,000                        57     63,000              3,591,000                           13,386              4,163,000
        4 Bedrooms                             16   55,000                  880,000                                                                                        2,830                880,000
                                                3   56,000                  168,000                                                                                          540                168,000
   TOTAL SALES PROCEEDS                                         50,878                    6,868,500                         59,881                  10,539,000     311              55,973                  17,407,500

   SUBSIDIES
      Federal Nehemiah Funds                                                                              176     15,000              2,640,000                            8,489              2,640,000

      Additional Public Subidy                      56,858                7,675,861                               88,526             15,580,613                           74,780             23,256,474
   TOTAL SUBSIDIES                                              56,858                    7,675,861                        103,526                  18,220,613                      83,268                  25,896,474

   * Public Improvements totals do not include West Poplar Phase II figures, which are not finalized.

   Source: Memos from Redevelopment Authority of the City of Philadelphia, February through April 2000.
Table 2

Differentials in Community Characteristics

                                                                   Demographic Group

Census Tract Attribute                                     All               Nehemiah                    Blacks        Whites
                                                                                Tracts

% White                                                 0.523                    0.041                    0.130         0.836
% Black                                                 0.394                    0.916                    0.818         0.098
% College Graduates                                     0.147                    0.055                    0.113         0.176
% Home Owners                                           0.633                    0.235                    0.598         0.668
% in Poverty                                            0.205                    0.579                    0.278         0.130
Murders Per Thousand People                             0.275                    0.861                    0.452         0.117
Public School Quality                                  12.047                    2.637                    5.531        17.265
Average Class Size                                     19.089                   19.805                   19.935        18.449
% Commercial Real Estate                                0.111                    0.289                    0.110         0.112

This table is constructed by taking census tract level data and calculating weighted means
using each demographic group's tract count as the weights.
Its entries represent the average exposure to a community attribute for the average member of the demographic group.
Public school quality is defined in the text.
Table 3
House Price as a Function of Structure Characteristics and Community Quality
Regression Model Based on Philadelphia Sales Transaction Data

Dependent Variable: Log of Price

               Structure Characteristics
                    Log of Total Area                                                                                    0.227 *
                                                                                                                         (0.017)

                      Number of Stories1,2
                              2                                                                                          0.003
                                                                                                                         (0.027)

                                    3                                                                                    0.098 *
                                                                                                                         (0.039)

                                    4 or more                                                                            0.482 *
                                                                                                                         (0.085)

                      Garage1                                                                                            0.286 *
                                                                                                                         (0.027)

               Community Characteristics
                  % Students Scoring Above State Median in Math Tests                                                    1.264 *
                                                                                                                         (0.204)

                      Classroom Size                                                                                    -0.024 *
                                                                                                                         (0.006)

                      Murder Rate per 1000 Persons                                                                      -0.606 *
                                                                                                                         (0.125)

                      % of Adults with Bachelor's Degree                                                                 2.133 *
                                                                                                                         (0.151)

                      % of Total Building Area That Is Commercial                                                        0.285 *
                                                                                                                         (0.156)

                      Miles from City Hall                                                                               0.013
                                                                                                                         (0.009)

               Constant                                                                                                  7.943 *
                                                                                                                         (0.235)

               Adjusted R-Squared                                                                                        0.595
                                3
               Observations                                                                                           146,053
Notes: Standard errors are in parentheses. *Asterisk is significant at 10% level.
       1. Dummy variables.
       2. Missing category is one story.
       3. Hedonic was run on 146,053 residential properties with at least one arm's length transaction between 1986 and 1997
        that have data on all variables in hedonic. In addition, to avoid misleading outliers, transactions with real 1998 dollar
        prices less than $5,000 or more than $1 million were not included in analysis.


        Math Scores are percent of 8th graders in census tract scoring above the percent of 8th graders scoring above the
        state median in the standard math tests; Classroom Size is total enrollment divided by number of teachers; Murder Rate
        is the average of murders for 1994 and 1995 per 1000 population; Education Level is percent of adults in census tract
        above 24 years old who have a college degree; Commercial Space is percent of census tract building area that is
        commercial; Distance from City Hall is distance in miles from center of tract to center of census tract #5, which
        houses city hall.

Source: Authors' calculations of City of Philadelphia Sales Journal and Inventory data, and 1990 Census.
Map 1

  Community Quality Index by Tract




                               Estimated Value of
                               Community Quality
                                 40,000 to 107,800 (51)
                                      0 to 40,000 (127)
                                -15,000 to       0 (70)
                                -50,000 to -15,000 (96)
                               -323,000 to -50,000  (6)
                               Not Available       (17)



                             Location of Nehemiah Projects
Table 4
Household Characteristics from Settlement Grant Program Data, 1993-1997
(Status at Time of Grant Application)

                                                               Settlement Grant Recipients                   Nehemiah
                                                           1
                                                     All         White     Black Hispanic          Other           All2

Percent of Households                            100.0%         19.8%       46.1%      28.1%        4.6%           1.1%

Mean Household Size                                  3.0           2.6         2.9        3.2         4.4            2.9
                                                     (1.5)         (1.4)      (1.4)      (1.5)       (2.2)          (1.5)

Percent Female-Headed Household                   64.2%         51.1%       72.7%      62.1%       47.4%          75.6%
                                                    (48.0)        (50.0)     (44.6)     (48.5)      (50.0)         (43.2)

Percent Elderly                                    1.2%          1.7%        0.8%       1.2%        2.2%           1.2%
                                                    (10.8)        (12.7)      (9.1)     (11.1)      (14.7)         (10.8)

Percent Handicapped                                2.0%          1.5%        1.0%       2.8%        9.3%           0.0%
                                                    (14.1)        (12.3)     (10.1)     (16.5)      (29.1)          (0.0)

OHCD Median Household Income (98$s)*            $19,448        $21,643     $21,405    $15,213    $16,135         $25,379

OHCD Median House Price (98$s)*                 $42,654        $46,750     $44,992    $36,361    $40,570         $49,129

OHCD Median Downpayment (98$s)*                   $1,239        $1,523      $1,263     $1,039     $1,309          $1,280

Median House Price/Income                            2.3           2.3         2.3        2.5         2.9            1.9

Percent Who Changed Tracts                        80.8%         70.5%       85.5%      83.6%       61.8%          90.5%
                                                    (39.4)        (45.6)     (35.2)     (37.1)      (48.7)         (29.5)

                             3
Distance Travelled (miles)                          1.88          1.42        2.30       1.63        1.06           2.19
                                                    (3.21)        (2.99)     (3.58)     (2.33)      (2.83)         (3.31)


Notes: Based on 8,059 households with address information. Standard deviations are in parentheses.
        * Household income, house price and downpayment are as reported by OHCD at time of grant, converted to
           real dollars. These values may vary from values reported by households in authors' survey.
       1. 113 households did not identify race.
       2. All 86 Nehemiah households had black heads-of-house.
       3. Distance from center of previous tract to center of current tract.
Source: Settlement Grant Recipient data, the Office of Housing and Community Development of the City
          of Philadelphia.
Table 5
Comparison of Renter (Origin) and Owner (Destination) Neighborhoods by Race
                                                                                             Settlement Grant                                                          Nehemiah
                                                          All                        White                       Black                     Hispanic
                                                   Renter   Owner               Renter  Owner               Renter  Owner              Renter   Owner              Renter       Owner
                                                    (origin)    (destination)   (origin)    (destination)   (origin)   (destination)   (origin)    (destination)   (origin)   (destination)


Mean Distance from Old Census                                          1.89                        1.42                       2.30                        1.63                       2.19
    Tract (miles)                                                      (2.01)                      (1.87)                     (2.24)                      (1.46)                     (2.07)


Portion of Census Tract Population                  38.9%            60.3% 86.1%                 91.4% 20.7%                43.1% 35.0%                 67.4% 15.1%                 3.5%
 That is White                                        (37.5)           (36.8)     (20.9)           (15.1)     (28.0)          (37.0)     (32.8)           (31.8)     (22.8)           (2.8)


Mean Distance from City Center (miles)                 4.42            5.10        4.98            5.27        4.49           5.26        4.05            4.88        3.31           2.37
                                                      (2.14)           (1.97)     (2.81)           (2.67)     (2.08)          (1.82)     (1.58)           (1.49)     (1.85)          (0.94)


Median Census Tract Household Income                25,334          29,143 30,619               31,984 25,972              29,553 20,424               26,684 21,829              10,894
  (98 dollars)

Median Census Tract House Value                     46,074          50,590 62,668               62,706 46,441              49,890 33,582               43,223 49,288              30,624
  (98 dollars)

Median Census Tract Monthly Rent                        509             531         532             538         508            539         491             506         450            196
  (98 dollars)

Mean Homeownership Rate                             62.9%            72.1% 72.3%                 76.9% 59.8%                69.9% 60.8%                 72.2% 46.0%                26.1%
                                                      (16.6)           (11.7)     (13.4)           (10.1)     (17.8)          (13.0)     (14.2)            (9.8)     (24.1)          (12.8)


        White Homeownership Rate                    73.5%            77.0% 75.0%                 78.5% 69.0%                74.9% 79.8%                 79.3% 58.4%                66.0%
                                                      (21.9)           (15.4)     (12.8)            (9.4)     (27.8)          (20.2)     (13.8)            (8.0)     (31.9)          (41.2)


        Black Homeownership Rate                    49.8%            48.1% 30.5%                 32.2% 54.3%                54.3% 50.2%                 40.4% 44.7%                26.5%
                                                      (25.3)           (29.2)     (31.9)           (34.8)     (22.3)          (25.7)     (23.7)           (30.6)     (25.0)          (11.9)


        Hispanic Homeownership Rate                 48.0%            53.7% 50.4%                 52.6% 47.6%                54.3% 46.8%                 53.1% 35.2%                 4.4%
                                                      (29.6)           (27.9)     (30.9)           (33.0)     (36.2)          (31.0)     (16.0)           (18.6)     (37.3)          (11.2)


Mean Percent of Adults in Census                      9.0%            8.5%        8.8%            8.1% 11.2%                10.1%        5.3%            5.9% 13.8%                 5.0%
      Tract with B.A.s                                  (9.9)           (6.3)       (8.4)           (6.0)     (11.4)           (7.0)       (7.2)           (4.4)     (16.4)           (1.4)



Notes: N=4,517 Settlement Grant and Nehemiah households for whom old and current tracts are known.
      Standard deviations are in parentheses.
Source: Settlement Grant Recipient Data, Office of Housing and Community Development, City of Philadelphia and 1990 Census.
Table 6
Community Quality Exposure For City and for Settlement Grant and Nehemiah Households
                                                                                         City as           Settlement Grant Households1                    Nehemiah
                                                                                         a Whole          All         White        Black         Hispanic Households

School Test Scores                     Percent of 8th grade students scoring                 12.0%        10.4%         13.9%          9.3%         8.9%         2.7%
                                         above the state median on math tests                  (10.4)         (0.7)        (7.6)         (6.7)        (6.9)        (1.0)

School Class Size                      Total student enrollment divided by                     18.9          19.8         18.2          20.5         20.0         20.6
                                         number of teachers                                     (2.2)         (2.5)        (2.1)         (2.5)        (2.2)        (3.6)

Crime                                  Number of murders per 1000 population                   0.34          0.28         0.11          0.32         0.36         0.89
                                                                                               (0.75)       (0.32)        (0.20)       (0.31)        (0.31)       (0.55)

Education                              Percent of adults over 24 who have                    17.9%          8.4%         8.1%        10.1%          5.8%         5.0%
                                         bachelor's degrees                                     (0.2)         (0.1)        (0.1)         (0.1)        (0.0)        (0.0)

Commercial Space                       Percent of total building area used for               13.7%          9.0%         8.0%        10.1%          8.8%         30.0%
                                         commercial space                                       (0.2)         (0.1)        (0.1)         (0.1)        (0.1)        (0.1)

Distance from City Center              Miles from center of tract to city hall                   5.2            5.1         5.2          5.2           4.8         2.4
                                                                                                (3.0)         (1.9)        (2.6)         (1.8)        (1.4)        (0.9)

Observations2:                                                                                  350        7,973         1,575        3,762         2,244           86

Notes: 1. 392 households did not identify race.
       2. Number of observations for City is 350 census tracts with data on all six measures. For Households columns, number of observations are households of
       each category in OHCD grant data. Values in Household columns reflect average tract values for tracts with OHCD households of each race, weighted
       by number of households of that race per tract.

Sources: Pennsylvania Department of Education, Philadelphia Police Department Homicide Division, 1990 Census, the Philadelphia Board of Revision of Taxes,
and Settlement Grant Recipient data, the Office of Housing and Community Development of the City of Philadelphia.
Table 7
Changes Among Community Quality Variables for Settlement Grant Recipients In Becoming Owners
                                                                              All                       White                      Black                      Hispanic
                                                                         Renter        Owner         Renter   Owner             Renter   Owner              Renter   Owner
Average for All Households

                             Math Scores1                                    8.1          10.5          13.6         14.2           6.4           9.3           6.5    9.3
                             Class Size2                                    19.3          19.8          18.1         18.1          19.9          20.5          19.1   19.8
                             Murder Rate per 1000 persons                   0.42          0.28          0.16         0.11          0.44          0.33          0.58   0.33
                                             3
                             Education Level                                0.09          0.08          0.09         0.08          0.11          0.10          0.05   0.06
                             Commercial Space4                              0.10          0.09          0.10         0.08          0.11          0.10          0.09   0.09
                             Distance from City Hall (miles)5                4.4           5.0           5.0          5.3           4.4           5.2           4.0    4.9

Notes: 1. Percent of 8th grade students scoring above state median in math tests.
        2. Total number of students per teacher.
        3. Percent of adults 24 and older who have bachelor's degrees.
        4. Percent of total building area used for commercial space.
        5. Miles from center of tract to city hall.
Based on 4425 households for whom both previous and current census tracts are known; 819 white, 2196 black, 1171 Hispanic, and 239 other.
Source: School source, Philadelphia Police Department Homicide Division, 1990 Census, the Philadelphia Boarf of Revision and Taxation, and authors' calculations.
Table 8

Determinants of Black Household Locational Choice

                                                              beta         se       beta        se

Tract % Black                                               0.279      0.046      -0.484      0.143
Tract % black*household income                                                     0.383      0.065
Tract Poverty Rate                                          -3.076     0.146       1.908      0.411
Tract Poverty Rate*household income                                               -2.561      0.201
Tract % College Graduates                                   0.454      0.238      -5.433      0.801
Tract % College Graduates*household income                                         2.740      0.330

observations                                                 3280                  3280
pseudo R2                                                   0.016                  0.02

This table reports estimates of a 204 dimensional conditional logit model. Each black
migrant household's choice of census tract is observed. The 204 census tracts
represent those tracts in the City of Philadelphia whose median home price in 1990 was less
than $60000. The choice of census tract is explained as a function of the tract's
poverty rate, % black, and % college graduate. The right column reports results where
these attributes are interacted with the migrant household's reported income.
Table 9
Survey Data
Survey Household Characteristics
(Status at Time of Survey, 1998-99)
                                                                 All1          White     Black     Hispanic Nehemiah

Percent of Households                                           100.0%          23.0%     57.0%          12.0%
Household Size                                                          3.4        3.3       3.4            4.0       2.8
Percent Female-Headed Household                                   43.8%         31.5%     55.3%          31.3%     44.7%
Age of Householder                                                  34.4          32.9      35.5           34.0      41.4
Percent Elderly                                                    0.5%          0.0%      0.9%           0.0%      0.0%
Percent With Children in House (any relation)                     79.3%         73.9%     82.0%          77.1%     57.9%
How Many Children Under 18 in House                                     2.3        1.5       2.3            1.8       1.0
Number of Adults in House                                               1.7        1.9       1.6            2.1       1.8
Number of Employed Adults in House                                      1.3        1.4       1.3            1.2       1.4
Number of Adults with B.A. in House                                     0.2        0.3       0.3            0.1       0.5
Survey Median Household Income (98$s)*                         $27,500         $32,500   $27,500        $22,500   $37,500
Survey Median House Price (98$s)*                              $40,612         $48,590   $39,493        $38,360   $52,500
Survey Median Downpayment (98$s)*                                $2,500         $2,557    $2,500         $2,633    $3,080
Median House Price/Income                                               2.2        2.1       2.1            2.2       2.0
Years Lived in Philadelphia                                         26.9          26.1      29.8           19.2      33.1
Percent Who Changed Tracts                                        82.9%         72.7%     83.3%          97.4%     87.1%
Percent Who Stated That They                                      59.0%         42.9%     63.4%          66.7%     57.3%
    Changed Neighborhoods

Distance Travelled (miles)2                                             1.9        1.7       2.0            1.9       1.9
Notes: Based on 400 Settlement Grant recipient households. Standard deviations are in parentheses.
       * Household income, house price and downpayment are as reported by survey respondents at the
         time of the survey, in 1998 dollars. These values may var from values reported by households
         to the OHCD at time of grant.
       1. 32 households did not identify race.
       2. Distance from center of previous tract to center of current tract.
Source: Authors' survey.
Table 10
Survey Data
Structure Characteristics for Nehemiah Households:
      for Nehemiah Residents
      Comparison of Renter and Owner Houses

                                                                Renter        Owner

                  Median House Price                                         $53,102
                  Rooms                                           6.17           7.60
                                                                   (2.11)        (1.19)

                  Beds                                            2.37           3.16
                                                                   (0.96)        (0.41)

                  Baths                                           1.16           2.02
                                                                   (0.37)        (0.38)

                  % Built 1980 or Later                           7.5%       100.0%
                                                                   (26.7)         (0.0)

                  Air Conditioning                              11.3%        100.0%
                                                                   (31.9)         (0.0)

                  Garage                                        14.5%          93.5%
                                                                   (35.5)        (24.8)

                  Single Family                                 67.7%        100.0%
                                                                   (47.1)         (0.0)

                        Detached Singe Family                   16.7%           3.3%
                                                                   (37.7)        (18.0)

                        Attached Single Family                  83.3%          96.7%
                                                                   (37.7)        (18.0)

                  Soundproof Walls                              37.7%          63.8%
                                                                   (48.9)        (48.5)

                  Problems with Leaks                           58.1%          19.4%
                                                                   (49.7)        (39.8)

                  Electrical Problems                           29.5%           8.1%
                                                                   (46.0)        (27.5)

                  Unsatisfied with House                           NA 1         1.6%
                                                                                 (12.7)

                  New House is Better than Old                                 85.5%
                                                                                 (35.5)
     Notes: 1. Not available.
             Standard deviations are in parentheses.
     Source: Authors' survey of 62 Nehemiah residents for whom previous tract is known.
              These are self-reported values.
Table 11
Survey Data
Structure Characteristics for Settlement Grant Recipients: Comparison of Renter and
   Owner Houses

                                                   All1                   White                    Black                  Hispanic
                                          Renter       Owner         Renter       Owner       Renter       Owner       Renter       Owner

Median House Price (98 dollars)                        $39,493                    $48,590                  $39,493                  $38,927
Rooms                                        6.26          7.63        6.62         7.58        6.31         7.83        5.62         7.21
                                              (2.33)        (1.60)      (2.10)       (1.56)      (2.48)       (1.55)      (2.10)       (1.80)

Beds                                         2.55          3.02        2.52         2.91        2.61         3.10        2.32         2.95
                                              (1.10)        (0.65)      (1.07)       (0.63)      (1.12)       (0.62)      (1.08)       (0.80)

Baths                                        1.20          1.34        1.17         1.32        1.21         1.37        1.21         1.29
                                              (0.48)        (0.55)      (0.41)       (0.57)      (0.52)       (0.56)      (0.53)       (0.52)

% Built 1980 or Later                        7.9%          8.1%        5.6%         2.9%        8.8%        11.2%       12.5%         9.7%
                                              (27.1)        (27.4)      (23.1)       (16.8)      (28.4)       (31.6)      (33.8)       (30.1)

Air Conditioning                             9.9%         11.2%       14.3%        13.0%        9.1%        10.2%        7.9%        10.5%
                                              (30.0)        (31.6)      (35.2)       (33.8)      (28.9)       (30.4)      (27.3)       (31.1)

Garage                                     26.2%          42.1%       38.2%        41.6%       22.0%        42.2%       23.7%        42.1%
                                              (44.0)        (49.4)      (48.9)       (49.6)      (41.6)       (49.5)      (43.1)       (50.0)

Single Family                              78.3%          100.0%      77.9%       100.0%       78.5%       100.0%       76.3% 100.0%
                                              (41.3)          0.0       (41.7)         0.0       (41.2)         0.0       (43.1)         0.0

    Detached Single Family                   9.1%          7.5%        8.3%         5.3%        8.2%         8.1%       13.8%        10.8%
                                              (28.9)        (26.4)      (27.9)       (22.5)      (27.6)       (27.4)      (35.1)       (31.5)

    Attached Single Family                 90.9%          92.5%       91.7%        94.7%       91.8%        91.9%       86.2%        89.2%
                                              (28.9)        (26.4)      (27.9)       (22.5)      (27.6)       (27.4)      (35.1)       (31.5)

Soundproof Walls                           28.2%          37.1%       29.7%        36.6%       28.3%        34.1%       23.5%        51.4%
                                              (45.0)        (48.4)      (46.0)       (48.5)      (45.2)       (47.5)      (43.1)       (50.7)

Problems with Leaks                        33.6%          21.2%       25.0%        24.7%       39.3%        21.1%       23.7%        21.1%
                                              (47.3)        (40.9)      (43.6)       (43.4)      (49.0)       (40.9)      (43.1)       (41.3)

Electrical Problems                        18.8%          13.7%       15.8%        16.9%       20.7%        14.5%       15.8%         7.9%
                                              (39.1)        (34.4)      (36.7)       (37.7)      (40.6)       (35.3)      (37.0)       (27.3)

Unsatisfied with House                       NA 2          3.7%        NA 2         3.9%        NA 2         3.2%        NA 2         7.9%
                                                            (19.0)                   (19.5)                   (17.7)                   (27.3)

                                                   2                          2                        2                        2
New House is Better Than Old                 NA           76.2%        NA          72.0%        NA          78.1%        NA          78.9%
                                                            (42.7)                   (45.2)                   (41.4)                   (41.3)


Notes: 1. 8% did not identify race of householder.
        2. Not available.
         Standard deviations are in parentheses.
Source: Authors' survey of 322 Settlement Grant Recipients for whom previous tract is known. These are self-reported values.
Table 12
Survey Data
Community Characteristics: Comparison of Current and Previous
      Neighborhoods for Nehemiah Residents
                                                                                       Renter         Owner
1990 Census Data1: Average Tract Values for Household Tracts
         Homeownership Rate                                                             48.5%         33.5%
                                                                                            (22.0)       (7.8)

         Vacancy Rate                                                                   14.7%         17.6%
                                                                                             (6.0)       (3.2)

         Housing Stock Built 1980 or Later                                                  4.0%       3.0%
                                                                                             (4.6)       (0.9)

         All Stock That is Commercial                                                   16.3%         35.9%
                                                                                             (0.2)       (0.1)

         Adults Who Are College Graduates                                               14.5%          5.9%
                                                                                            (17.2)       (1.7)

         Median Tract House Value (98$s)                                              $33,257        $22,741
         Median Tract Household Income (98$s)                                         $24,706        $13,037
         Poverty Rate                                                                   31.9%         53.4%
                                                                                            (15.4)       (3.8)

         Murder Rate per 1000 Persons1                                                      0.50        0.69
                                                                                            (0.38)      (0.24)

         Population White                                                               15.4%          2.3%
                                                                                            (25.3)       (1.7)

         Population Black                                                               79.4%         95.8%
                                                                                            (31.3)       (4.6)

         Population Hispanic                                                                3.1%       1.4%
                                                                                             (9.8)       (2.1)

                                                                        1
         Students Scoring Above State Median in Math                                        5.4%       2.2%
                                                                                             (6.5)       (0.5)

         School Class Size1                                                                 20.7        22.6
                                                                                            (2.5)       (2.2)
         Distance from City Center2                                                         3.41        2.87
                                                                                            (1.65)      (0.60)

Survey Data: Average Household Values3
         Satisfied with Neighborhood                                                        NA 5      64.5%
                                                                                                        (48.2)

         New Neighborhood Better Than Old                                                    --       68.6%
                                                                                                        (47.1)

         Litter/Abandoned Buildings/etc. a Problem                                          NA 5      83.6%
                                                                                                        (37.3)

         Current Neighborhood More Attractive                                                --       62.9%
           Than Old Neighborhood                                                                        (49.0)

         Take Crime Precautions                                                         35.5%         66.1%
                                                                                            (48.2)      (47.7)

         Schools are Good                                                                   NA 5      25.5%
                                                                                                        (44.1)

         Schools in Current Neighborhood Are Better                                          --       25.7%
            Than in Old Neighborhood                                                                    (44.3)


         Distance from Old Census Tract4                                                     --         1.92
                                                                                                        (1.93)


Note: 1. From Census 1990, except murder rates, math scores, and tract distance measures.
     2. Distance in miles from center of tract to center of tract #5, where city hall is.
     3. These are self-reported values.
     4. Distance in miles from center of previous tract to center of current tract.
     5. Not available.
Sources: Census 1990; Philadelphia Police Department Homicide Division; Pennsylvania Department
         of Education; and author's survey of 62 Nehemiah residents for whom previous tract is known.
Table 13
Survey Data
Community Characteristics for Surveyed Grant Recipients: Comparison of Renter and
      Owner Neighborhoods
                                                                 1
                                                            All                           White                    Black                     Hispanic
                                                          Renter              Owner       Renter        Owner      Renter        Owner        Renter        Owner

Census Tract Data2: Average Tract Values For Household Tracts
    Homeownership Rate                                          63.1%           71.1%       70.6%        76.9%       60.5%        68.4%         60.1%         71.0%
                                                                  (17.9)         (12.6)       (15.6)      (10.1)       (18.2)       (13.5)        (17.0)       (10.0)

    Vacancy Rate                                                11.4%            9.3%        8.4%         6.9%       12.7%        10.4%         12.2%         9.5%
                                                                     (5.5)        (4.9)        (4.8)       (3.9)        (5.5)        (5.1)         (4.9)        (4.2)

    Housing Stock Built 1980 or Later                           2.7%             1.8%        2.0%         1.8%        2.5%         2.1%          3.7%         0.6%
                                                                     (4.5)        (3.4)        (3.6)       (3.6)        (3.5)        (3.7)         (6.7)        (1.6)

    All Stock That is Commercial                                10.2%            9.0%        8.6%         7.2%       11.1%         9.7%          9.5%         10.2%
                                                                  (11.0)          (8.8)        (7.3)       (5.3)       (12.6)       (10.5)         (6.9)        (6.3)

    Adults Who Are College Graduates                            10.8%            9.1%       10.7%         8.9%       11.1%         9.5%         10.1%         7.8%
                                                                  (10.9)          (6.2)       (11.1)       (6.9)       (10.7)        (5.9)        (13.0)        (6.8)

    Median Tract House Value (98$s)                         $45,088           $47,980      $59,548      $67,172     $40,553      $44,168       $27,013      $47,980
    Median Tract Household Income (98$s)                    $28,007           $32,045      $33,132      $33,264     $26,836      $30,555       $22,522      $29,295
    Poverty Rate                                                25.1%           19.1%       16.7%        13.0%       26.4%        21.3%         35.3%         21.7%
                                                                  (14.8)         (11.6)       (12.7)       (9.2)       (12.5)       (11.6)        (19.2)       (12.1)

    Murder Rate per 1000 Persons2                                 0.37           0.30         0.16         0.11        0.44         0.40          0.48         0.27
                                                                  (0.35)         (0.32)       (0.20)      (0.17)       (0.36)       (0.36)        (0.41)       (0.25)

    White Population                                            41.3%           56.3%       82.8%        87.7%       22.1%        38.0%         45.4%         74.2%
                                                                  (38.9)         (38.1)       (25.6)      (19.7)       (29.7)       (36.2)        (34.0)       (25.6)

    Black Population                                            47.9%           33.4%        9.9%         7.1%       72.0%        52.0%         16.7%         6.0%
                                                                  (40.7)         (39.2)       (21.8)      (17.8)       (32.7)       (40.3)        (18.8)       (11.9)

    Hispanic Population                                         8.1%             6.3%        4.5%         2.8%        3.7%         5.8%         34.2%         14.4%
                                                                  (17.0)         (12.5)        (9.7)       (7.2)        (9.8)       (11.6)        (27.9)       (17.7)

    Students Scoring Above State Median in Math2                8.9%            10.4%       13.7%        14.3%        6.7%         8.4%          7.9%         10.5%
                                                                     (7.7)        (7.5)        (9.3)       (8.8)        (5.6)        (6.1)         (6.5)        (6.9)

    School Class Size2                                            19.3           19.6         18.1         18.2        20.0         20.3          18.5         19.3
                                                                     (2.2)        (2.5)        (2.0)       (2.4)        (2.0)        (2.2)         (2.0)        (2.7)

    Distance from City Center2,3                                  4.57           5.08         4.89         5.25        4.51         5.06          4.23         5.14
                                                                  (2.34)         (2.06)       (2.84)      (2.57)       (1.97)       (1.82)        (2.23)       (1.60)

                                                            4
Survey Data: Average Household Values
    Satisfied with Neighborhood                                   NA 6          65.1%         NA 6       67.5%         NA 6       62.9%           NA 6        63.2%
                                                                                 (47.7)                   (47.1)                    (48.4)                     (48.9)

    New Neighborhood Better Than Old                                 --         68.3%          --        70.0%          --        71.4%            --         52.0%
                                                                                 (46.7)                   (46.6)                    (45.4)                     (51.0)
                                                                          6                         6                        6                          6
    Litter/Abandoned Buildings/etc. a Problem                     NA            67.9%         NA         64.5%         NA         66.8%           NA          65.8%
                                                                                 (46.8)                   (48.2)                    (47.2)                     (48.1)

    Current Neighborhood More Attractive                             --         58.1%          --        53.3%          --        60.5%            --         52.0%
      Than Old Neighborhood                                                      (49.5)                   (50.7)                    (49.1)                     (51.0)

    Take Crime Precautions                                      28.0%           56.2%       16.9%        50.6%       32.8%        58.1%         31.6%         60.5%
                                                                  (44.9)         (49.7)       (37.7)      (50.3)       (47.1)       (49.5)        (47.1)       (49.5)

    Schools are Good                                              NA 6          54.2%         NA 6       45.9%         NA 6       52.6%           NA 6        73.5%
                                                                                 (49.9)                   (50.2)                    (50.1)                     (44.8)

    Schools in Current Neighborhood Are Better                       --         51.6%          --        36.7%          --        55.5%            --         48.0%
     Than in Old Neighborhood                                                    (50.1)                   (49.0)                    (49.9)                     (51.0)

    Distance from Old Census Tract5                                  --          1.90          --          1.69         --          1.96           --          1.93
                                                                                 (2.01)                   (2.41)                    (1.99)                     (1.40)

Notes: 1. 7% did not identify race of householder.
        2. From Census 1990, except murder rates, math scores, and tract distance measures. Includes 147 tracts weighted by the number of Grant
                Recipient households per tract. Households include only those for whom previous tract is known.
        3. Distance in miles from center of tract to center of tract #5, where city hall is.
        4. These are self-reported values.
        5. Distance in miles from center of previous tract to center of current tract.
        6. Not available.
        Standard deviations are in parentheses.
Sources: Census 1990; Philadelphia Police Department Homicide Division; Pennsylvania Department of Education; and authors' survey of 322 Settlement
        Grant Recipients for whom previous tract is known.
Table 14
Survey Data
House Price as a Function of Structure Characteristics and Community Quality
Regression Model Based on Survey Data on Settlement Grant Recipients

Dependent Variable: Log of Price
Structure Characteristics from Survey Data
         Rooms                                                                                       0.044 *
                                                                                                     (0.016)

         Baths                                                                                       0.047
                                                                                                     (0.034)

         Air Conditioning1                                                                           0.157 *
                                                                                                     (0.071)

         Garage1                                                                                     0.143 *
                                                                                                     (0.046)

         Soundproof Walls1                                                                           0.076 *
                                                                                                     (0.036)

         Problems with Leaks1                                                                        -0.104 *
                                                                                                     (0.050)

Community Characteristics from Census Data
         % Students Scoring Above State Median in Math Tests                                         1.044 *
                                                                                                     (0.295)

         Classroom Size                                                                              -0.002
                                                                                                     (0.007)

         Murder Rate per 1000 Persons                                                                -0.092
                                                                                                     (0.074)

         % of Adults with Bachelor's Degree                                                          1.425 *
                                                                                                     (0.258)

         % of Total Building Area That Is Commercial                                                 0.223
                                                                                                     (0.207)

         Miles from City Hall                                                                        0.019
                                                                                                     (0.207)

Constant                                                                                             9.829 *
                                                                                                     (0.179)

Adjusted R-Squared                                                                                   0.376
Observations                                                                                           313

Notes: 313 Non-Nehemiah Settlement Grant households in authors' survey with data on all variables.
       Standard errors are in parentheses. *Asterisks are significant at 10% level.
       1. Dummy variables.
Sources: Authors' calculations using authors' Survey results and 1990 Census data.
Table 15
Survey Results
Neighborhood Search

                                                        All           White        Black         Hispanic      Nehemiah

Number of houses looked at
                                 Range                    1-80           1-80         1-60            1-15          1-15
                                 Average                      7.1          8.0             7.1          6.0           4.3
                                 (Standard Deviation)         (6.8)       (9.4)        (6.1)           (4.5)         (4.2)


Number of Philadelphia neighborhoods looked at
                                  Range                       1-8         1-4          1-8             1-4           1-5
                                 Average                      1.4          1.2             1.4          1.5           1.4
                                 (Standard Deviation)     (0.88)         (0.66)       (0.98)          (0.80)        (0.99)


Looked in suburbs
                                 Average                14.8%           14.1%        14.5%           8.3%         26.3%
                                 (Standard Deviation)    (35.50)        (35.02)      (35.26)         (27.93)       (44.33)


Number of suburbs looked at
                                 Range                        0-4         0-2          0-4             0-1           0-4
                                 Average                      0.2          0.2             0.2          0.1           0.5
                                 (Standard Deviation)     (0.64)         (0.57)       (0.62)          (0.28)        (0.99)



Observations                                                   400            92           228           48            76


Source: Authors' survey.
Table 16
House Price as a Function of Structure Characteristics and Community Quality
Regression Model Based on Philadelphia Sales Transaction Data

                                                                     beta                 s.e              beta            s.e

Dummy for Nehemiah Tracts                                          -0.401              0.108             -0.390          0.109
Dummy for Nehemiah Tracts Post-Nehemiah                             0.120              0.045              0.117          0.046
Dummy for Control Group #1                                         -0.274              0.107
Dummy for Control Group #1 Post-Nehemiah                            0.223              0.064
Dummy for Control Group #2                                                                               -0.179          0.075
Dummy for Control Group #2 Post-Nehemiah                                                                  0.090          0.051
Log of Total Area                                                   0.228              0.017              0.228          0.017
Number of Stories 2                                                -0.003              0.027              0.001          0.027
Number of Stories 3                                                 0.092              0.038              0.103          0.038
Number of Stories 4 or more                                         0.470              0.085              0.484          0.087
Garage                                                              0.287              0.027              0.286          0.026
Community Attributes
% Students Scoring Above State Median in Math Tests                 1.259              0.202              1.251          0.201
Classroom Size                                                     -0.024              0.006             -0.023          0.006
Murder Rate per 1000 persons                                       -0.580              0.123             -0.597          0.125
% of Adults with Bachelor's Degree                                  2.113              0.152              2.130          0.150
% of Total Buildings That is Commercial                             0.326              0.167              0.318          0.159
Miles from City Hall                                               0.0132              0.009             0.0133          0.009
Constant                                                            7.934              0.235              7.922          0.234
observations                                                      146053                                146053
R2                                                                  0.596                                 0.595

Note: This table reports two hedonic home price regressions based on equation (1) in the text.
Control Group #1 is defined as the set of census tracts with poverty rates greater than or equal to 50% and these
tracts are greater than 1.2 miles away from the closest Nehemiah tract.
Control group #2 is defined as the set of census tracts that share a border with at least one Nehemiah tract.
The data set covers the years 1986-1997 and year dummies are included in each regression.
Post-Nehemiah is a dummy variable that equals one if in that year the Nehemiah housing complex already had been built.
Table 17
Survey Data
Relationship between Community Quality Objective Measures and Impressions of Community Quality
                                                                                                                                                                                       CRIME PRECAUTION
  Regression #:                                                        1                 2             3                4               5            6              7   8          9           10        11              12
                                                                                                                                                                      Taken Following Crime Precaution:
Dependent Variables (Survey Respondents'                                                                  Good                                    Undesirable  Avoid   Do not        Install     Avoid                 Taken Any
Opinion of Their Neigbhorhood):                                      Good              Good              Social         Helpful          Good          Street Public Go Out      Protection Going Out Keep a               Crime
                                                                   Schools           Schools        Connections      Neighbors        Shopping       Activity Transit   Alone      Devices     At Night Weapon         Precaution
% of 8th grade students scoring above the state                         0.047             0.044
       median on math tests                                             (0.376)           (0.375)


Classroom size                                                         -0.007            -0.007
                                                                        (0.010)           (0.010)


Household inquired about school quality                                                   0.150 *
      before moving                                                                       (0.053)


Years in current community                                                                              0.008 *             0.004 *
                                                                                                           (0.003)          (0.002)


Household moved less than 1.25 miles                                                                       0.144
                                                                                                           (0.091)


Percent of neighborhood's total building                                                                                                0.462
      areas that is commercial                                                                                                          (0.292)


Murder rate (average of 1994 and 1995)                                                                                                                   0.244 *   0.064 *   0.083 *    0.111     0.067      -0.022       0.104
                                                                                                                                                         (0.054)   (0.028)   (0.037)    (0.083)   (0.049)    (0.049)      (0.088)


Nehemiah Resident                                                      -0.270 *          -0.250 *       -0.025 *            0.066 *    -0.445 *       -0.118 * -0.035 *      -0.057     0.143 *   -0.077 *   0.046        0.098 *
                                                                        (0.069)           (0.070)          (0.058)          (0.052)     (0.091)          (0.031)   (0.018)   (0.039)    (0.050)   (0.022)    (0.052)      (0.042)


Age of Household Head                                                   0.006 *           0.007 *          0.006 *          0.005 *    -0.003            0.004 *   0.001     0.000     -0.007 *   -0.003 *   -0.002       -0.007 *
                                                                        (0.003)           (0.003)          (0.003)          (0.002)     (0.003)          (0.002)   (0.001)   (0.001)    (0.003)   (0.002)    (0.002)      (0.002)


Race of Household Head
      Black                                                             0.062             0.064         -0.213 *         -0.109        -0.189 *       -0.027       0.011     -0.014     0.012     0.071 *    -0.034       0.069
                                                                        (0.071)           (0.070)          (0.069)          (0.066)     (0.065)          (0.059)   (0.028)   (0.039)    (0.071)   (0.033)    (0.045)      (0.070)


        Hispanic                                                        0.264 *           0.277 *       -0.193 *         -0.212 *      -0.157 *       -0.019       0.062     0.011     -0.075     0.036      -0.048       0.014
                                                                        (0.081)           (0.082)          (0.087)          (0.093)     (0.093)          (0.070)   (0.065)   (0.053)    (0.101)   (0.064)    (0.037)      (0.104)


Pseudo R-Squared                                                        0.051             0.065            0.081            0.028       0.090            0.044     0.031     0.024      0.024     0.042      0.010        0.022

Observations                                                               384               384             362              428           437            436       432       437        434       436        435            441

Notes: We use probit models in this appendix because the our dependent variable takes on the value 0 or 1.
       Standard errors are in parentheses. *Asterisk is statistically significant at 10% level.
Sources: Pennsylvania Department of Education, Authors' survey, Philadelphia Board of Revision and Taxation.

				
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