An empirical examination of the externalities of neighborhood churches on housing values

Recently, establishment of churches in residential neighborhoods has become controversial. This study is the first to address the issue of whether a neighborhood church positively or negatively affects the value of nearby single-family properties. This hypothesis is tested with a standard hedonic pricing model, using a sample of 469 sales transactions drawn from a large metropolitan area. Nonchurch effects are held constant with a standard set of housing-related variables. A distance variable is included to measure the direction and magnitude of the externality effect. Results indicate the effect of churches on sales price is negative up to approximately 850 feet. The authors suggest that empirical evidence such as this will inform both public and private parties involved in land use decisions relating to neighborhood churches.     

The Impact of Small Brownfields and Greenspaces on Residential Property Values

Using a hedonic pricing model, this paper investigates the responsiveness of residential property values in a well-defined inner-city neighborhood of Kenosha, Wisconsin, to the presence of two small former industrial sites contaminated by various environmental pollutants, or brownfields, and a local neighborhood park, or greenspace. Using readily available data on sales and assessments for residential property in close proximity to the brownfields and the greenspace, we estimate well-behaved and statistically significant property value gradients with respect to the park, the environmental amenity, and the brownfields, the environmental disamenities. These functions are then used to estimate the possible impact that brownfield remediation may have on total property value. We estimate that remediation and redevelopment of the brownfields into greenspaces would increase property values for the 890 neighborhood residences between $2.40 and $7.01 million. These results suggest that small brownfields have a measurable impact on property values and that readily accessible data can be used to help local policymakers make decisions on remediation issues.     

A Spatial Autocorrelation Approach for Examining the Effects of Urban Greenspace on Residential Property Values

This paper presents spatially explicit analyses of the greenspace contribution to residential property values in a hedonic model. The paper utilizes data from the housing market near downtown Los Angeles. We first used a standard hedonic model to estimate greenspace effects. Because the residuals were spatially autocorrelated, we implemented a spatial lag model as indicated by specification tests. Our results show that neighborhood greenspace at the immediate vicinity of houses has a significant impact on house prices even after controlling for spatial autocorrelation. The different estimation results from non-spatial and spatial models provide useful bounds for the greenspace effect. Greening of inner city areas may provide a valuable policy instrument for elevating depressed housing markets in those areas.     

Year-Round School Schedules and Residential Property Values

Debate concerning the advantages and disadvantages of year-round schedules surrounds quality of education and cost. The purpose of this article is to estimate the impact of different schedules on residential property values after controlling for school expenditures, quality of education, and neighborhood socioeconomic conditions. Furthermore, we explore the possibility that different size houses, based on the number of bedrooms, may experience a differential price impact to a year-round schedule. We find evidence that year-round schools may be more of a nuisance for nonparents than for families with children for the Clark County School District which includes Las Vegas, Nevada.     

Spillover Effects of Foreclosures on Neighborhood Property Values

Previous studies have shown that foreclosure often results in vandalism, disinvestment and other negative spillover effects in the neighborhood. This paper extends these views into a formal theoretical model through pricing based on comparables. We project that the spillover effect of a foreclosure on neighborhood property values depends on two factors: the discount of foreclosure sale and the weight placed on the foreclosed property as a comparable in the valuation. The former is related to housing cycle and the latter varies by time of foreclosure and its distance from the subject property. Empirical results based on a 2006 sample show that this effect is significant within a radius of 0.9 km (roughly 10 blocks) and within 5 years from its liquidation. The most severe impact is an 8.7% discount on neighborhood property values, which gradually drops to anywhere between −1.2 to −1.7% for foreclosures liquidated within the past 5 years. These spillover effects vary slightly when the sample selection bias is taken into account. Based on an alternative sample of purchase transactions in 2003, the estimated spillover effects in booming years are reduced by half, confirming on the important role played by housing cycles.

A Housing Price Model with Endogenous Externality Location: A Study of Mobile Home Parks

This research explores the impact of mobile home parks on the value of single-family homes. This is the first study that empirically analyzes the effect of mobile home parks on property values. The empirical methodology used attempts to address the potential identification problem that exists within this study; it is possible that mobile home parks are located in areas of relatively lower land values or next to other land uses that impact property values. To address this identification problem, mobile home park locations are treated as endogenous within the model and the mobile home parks are identified as being located in residential or non-residential areas. The results suggest a negative effect on the selling price of single-family dwellings in close proximity to mobile home parks located in residential areas.     

The economic impact of a transient hazard on property values: The 1988 Pepcon explosion in Henderson,Nevada

This article investigates the effect of the May 1988 explosion of a chemical plant in Henderson, Nevada on residential property values (1) before the explosion (anticipation), (2) between the time of the explosion and an announcement of relocation, and (3) subsequent to an announcement in July 1988 that the plant would be rebuilt 100 miles away in Cedar City, Utah. This article uses the conventional hedonic model wherein the real prices of residential houses are related to the characteristics of the property (age, size, and amenities); the timing of the sale; and distance from the site of the explosion, rounded to the nearest mile. A quadratic specification of the model showed that the model was sensitive to the mean distance from the hazard. In a sample of properties throughout the Las Vegas Valley, property values decreased with distance from the explosion, indicating the presence of other hazards. The quadratic specification was stable only for properties within six miles of the explosion site, which included the communities of old Henderson (to the east) and the master planned community of Green Valley (to the west). A discontinuous specification of the model, in which distance was measured by a set of dummy variables (i.e., within two miles, within three miles, etc.) proved to be much more stable. Property within two miles of the hazard were depressed both before and after the explosion, although after the relocation announcement, property values rebounded to reflect the reduction in the number of hazardous plants. This article lends weight to the accumulating body of evidence that real estate markets do behave efficiently.     

Another Look at Effects of “Adults-Only” Age Restrictions on Housing Prices

This study reexamines the price effects of age restrictions on housing prices. Our data cover a period when the housing market is taking a steep downturn. We argue that, when housing prices are falling, seniors are more likely to avoid investing in housing for at least two reasons. First, seniors are relatively more sensitive to their immediate equity loss than younger homeowners, mainly due to the limited remaining lifetime over which they can afford to wait; second, age-restriction acts as a luxury good, with seniors not willing to pay for reduction in neighborhood uncertainty, eliminating buyer demand for this segment of the population. If this “larger demand loss” outweighs the positive externality of the reduction in neighborhood uncertainty during the market downturn, we would observe that age-restrictions reduce property values. Using data from Broward County, Florida for the years of 2005–2007, we find a significant discount in residential condominium prices due to age-restrictions. In particular, we find that imposing age-restriction on properties decreases housing prices by 17.9% during the period May 2005 to April 2006, while the discount is worse, 22.7%, during the later period May 2006 to May 2007.     

The Impact of Railway Stations on Residential and Commercial Property Value: A Meta-analysis

Railway stations function as nodes in transport networks and places in an urban environment. They have accessibility and environmental impacts, which contribute to property value. The literature on the effects of railway stations on property value is mixed in its finding in respect to the impact magnitude and direction, ranging from a negative to an insignificant or a positive impact. This paper attempts to explain the variation in the findings by meta-analytical procedures. Generally the variations are attributed to the nature of data, particular spatial characteristics, temporal effects and methodology. Railway station proximity is addressed from two spatial considerations: a local station effect measuring the effect for properties with in 1/4 mile range and a global station effect measuring the effect of coming 250 m closer to the station. We find that the effect of railway stations on commercial property value mainly takes place at short distances. Commercial properties within 1/4 mile rang are 12.2% more expensive than residential properties. Where the price gap between the railway station zone and the rest is about 4.2% for the average residence, it is about 16.4% for the average commercial property. At longer distances the effect on residential property values dominate. We find that for every 250 m a residence is located closer to a station its price is 2.3% higher than commercial properties. Commuter railway stations have a consistently higher positive impact on the property value compared to light and heavy railway/Metro stations. The inclusion of other accessibility variables (such as highways) in the models reduces the level of reported railway station impact.

Intrametropolitan Decentralization: Is Government Structure Capitalized in Residential Property Values?

This paper examines the influence that the intrametropolitan growth in special districts has on residential property values. Our empirical approach tests whether the benefits of decentralizing local public good providers increases, decreases or leaves residential property appreciation rates unchanged. Past research in this area has been limited by the lack of variation in government structure within a region and by the self-selection of areas that decentralize governments. This research overcomes these limitations by 1) comparing appreciation rates for single-family homes that were located in areas that added local governments to appreciation rates for properties that were not; and 2) employing an estimation technique that border matches repeat sales to control for the self-selection of government structure. Overall, empirical results indicate that institutional decentralization has no influence on single-family property appreciation rates. It makes no difference whether the new government is the 3rd, 4th, 5th or 6th new jurisdiction–the new government does not influence appreciation rates. Residential property values for homes located in jurisdictions that added security special districts experienced rates of appreciation that were lower than otherwise comparable properties. Recreation, fire, water, sewer and other special districts had no measurable influence on appreciation rates. Empirical results also indicate that more overlap among local governments reduces appreciation rates. New governments created in areas whose residents have greater income heterogeneity increase appreciation rates. The distance separating the new government from existing governments, the land area of the new government and the creation of multiple new governments have no influence on appreciation rates. Finally, these results depend on the border matching repeat sales estimation technique employed here.     

Private Investment, Public Aid and Endogenous Divergence in the Evolution of Urban Neighborhoods

This paper offers a novel explanation for urban blight and endogenous divergence in the overall quality and wealth of neighborhoods and simultaneously derives the salient features of actual urban renewal and other aid programs from optimizing government behavior based on collective public preferences. These features appear when the objective of such public aid programs is to restore the ex ante distribution of wealth or property values within a blighted neighborhood, while equilibria exhibiting deficient levels of private investment and blight itself can arise when residents accurately anticipate the potential provision of public aid to an affected neighborhood and ex ante investment in private insurance diminishes neighborhood eligibility for such aid. Examples of antipodal equilibria in which urban renewal programs entirely crowd out local private investment or in which neighborhood residents invest in efficient levels of private mitigation illustrate these results, which stand in direct contrast to both traditional explanations of urban blight and to the new “social-interaction” models of neighborhood divergence.     

Budgeting in Catholic Parishes: An Exploratory Study

In this paper an aspect of accounting, namely budgeting, has been studied in an organizational context. According to Booth (1993) churches represent 'extreme cases' in which to study the impact of accounting. Following on from Laughlin (1988) Booth considered the sacred and secular divide to be a significant element in the use of accounting by church organizations. The parishes of the Catholic Archdiocese of Melbourne form the context of this study in which evidence is sought for the sacred and secular divide by studying the role of budgeting in the parish. Questions were asked regarding participation in the budgetary process and the development and use of the budget. It was found that there was little consultation or participation in the budgetary process and that the use of the budget was restricted. These findings suggest that the sacred and secular divide operates at the parish level.     

Flood Hazards, Insurance Rates, and Amenities: Evidence From the Coastal Housing Market

This study employs the hedonic property price method to examine the effects of flood hazard on coastal property values. We utilize Geographic Information System data on National Flood Insurance Program flood zones and residential property sales from Carteret County, North Carolina. Our results indicate that location within a flood zone lowers property value. Price differentials for flood risk and the capitalized value of flood insurance premiums are roughly equivalent—both exhibiting a nonlinear relationship in flood probability. Our results support the conclusion that flood zone designation and insurance premiums convey risk information to potential buyers in the coastal housing market.     

The Benefits of Visibility Improvement: New Evidence from the Los Angeles Metropolitan Area

This article examines the impact of a specific aspect of air quality—visibility, or the ability to clearly see distant objects—on housing values. Our analysis is based on a data set constructed by matching residential housing sales data from the Los Angeles Metropolitan Area for the period 1980 through 1995 with visibility and other air pollution data and other characteristics. We find that visibility differences are capitalized into housing values, producing a measurable hedonic price gradient. The time-series design facilitates an estimate of the demand for visibility that we use to calculate the benefits of changes in visual range.     

Property-Value Impacts of an Environmental Disamenity: The Case of Landfills

The purpose of this article is to quantify the property-value impacts of a change in environmental quality by using the hedonic price model. In particular, we focus on the impact of the presence of landfills on nearby residential real estate prices. We combine elements of an urban location choice and hedonic pricing model to estimate the effects of the presence of multiple environmental disamenities on residential real estate prices. We explicitly account for temporal effects by including housing transactions in areas with both open and closed landfills and control for information effects. In addition, we treat property taxes and prices as being simultaneously determined. Our analysis suggests that closing landfills will not necessarily mitigate property-value impacts.     

Neighborhood Street Layout and Property Value: The Interaction of Accessibility and Land Use Mix

This paper evaluates how consumers value differences in neighborhood composition and street layout, factors not previously included in empirical studies of house value. Highly connected street patterns are important to New Urbanism. We use measures of neighborhood street connectivity and their interaction with other neighborhood attributes to evaluate how street layout affects property values. We employ two different methods of indexing street layout. Both methods show layout has a significant impact on price, but conclusions are sensitive to the method used. In pedestrian oriented neighborhoods, a more gridiron-like street pattern increases house value using one measure, but greater connectivity decreases house value using the other. In auto-oriented developments, a more gridiron-like street pattern reduces house value using either measure.

Determinants of the incidence of U.S. Mortgage Loan Modifications

This paper combines data on the performance of mortgage loans with detailed borrower, neighborhood, and property characteristics to examine the factors that determine the outcomes of seriously delinquent loans. We employ multinomial logit models in a hazard framework to explain how loan, borrower, property, servicer and neighborhood characteristics affect which of the following four outcomes results from a seriously delinquent loan: (1) the borrower cures the delinquency; (2) the borrower and lender agree to modify the loan; (3) the borrower suffers a liquidation (short sale, deed in lieu, foreclosure auction sale or REO); or (4) the loan remains delinquent. In particular, we focus on mortgage modification. We find that the outcomes of delinquent loans are significantly related to: current LTV, FICO scores, especially risky loan characteristics, the servicer of the loan, neighborhood housing price appreciation, and whether the borrower received foreclosure counseling.     

The value of a neighborhood street with reference to the cul-de-sac

This article provides empirical evidence from Halifax, Nova Scotia, confirming the view that the type of neighborhood street can affect home values. The study identifies two categories of streets-the cul-de-sac and the grid-and measures their impacts on home value. The hypothesis that the cul-de-sac would attract premium values was supported by the study. In this study, the cul-de-sac generated a 29 percent price premium over the grid street pattern. The study concludes with a discussion of planning and development implications.     

Casino Revenues and Retail Property Values: The Detroit Case

We analyze the effects of commercial casinos on retail property values in the Detroit urban area. Accounting for property characteristics and proximity to the casinos, casinos are found to have a significantly positive influence on retail property values. The effect is stronger within a 5-mile radius of the casinos, suggesting that casinos have a complementary, rather than substitution, effect on other businesses. This provides some of the first micro-level empirical evidence to support the “drawing power” of casinos and the impact of consumer spending on surrounding businesses. The model developed and tested in this study can be applied to other casino jurisdictions to gain further evidence on the impact of commercial casinos.     

New development: Churches and charity accounting

This article outlines the impact of the charity accounting regime on churches in the various legal jurisdictions of the UK. While churches have charitable status throughout the UK, historically they have not necessarily had to follow the normal requirements for charity financial reporting. But churches are now starting to submit accounts to regulators like other charities and the impact of this is considered.