An article recently published in Cityscape, “Neighborhood Home Price Impacts of Community Development Block Grant Spending: Longitudinal Evidence From Three Jurisdictions,” measures the impact of Community Development Block Grant (CDBG) program funding on low-to-moderate income (LMI) neighborhood home values in Jersey City, Los Angeles County, and Washington, D.C. The researchers found that CDBG investments were associated with significant increases in home prices near CDBG investments in LMI neighborhoods.
The authors compared sale trends of single-family homes and condominiums in LMI neighborhoods located within 2,000 feet of a CDBG place-based investment before and after such investment. They also compared home price trends in LMI neighborhoods receiving CDBG investments to a control group of nearby LMI neighborhoods not receiving investments. LMI neighborhoods were defined as those with median incomes at or below 80% of the area median in 2019. The researchers received data from local government offices on the type, amount, and locations of CDBG place-based investments in Jersey City, Los Angeles County, and Washington, D.C. Single-family home and condominium sale data from 2000 to 2019 for each study location and their adjacent neighborhoods were obtained from the Zillow transaction and assessment dataset (Z-TRAX).
In all three jurisdictions, the researchers found that CDBG investments were associated with significant increases in neighborhood home prices. Specifically, home prices within 2,000 feet of a CDBG investment in D.C., Jersey City, and Los Angeles County rose, on average, 19%, 16%, and 5%.
When and for how long the impacts of CDBG were felt by local housing markets varied across jurisdictions. In D.C., the association between home sale prices and CDBG investments was observed one year after the investment, with homes prices within 2,000 feet of an investment increasing 17% higher than otherwise expected the year after the investment. The increase in prices remained significant each year for nine years after the investment, ranging from 12% to 18% higher than otherwise expected. In Jersey City, the impact of CDBG was not significant until four years after the investment when prices increased 10% higher than otherwise expected. From year five to year nine, home prices were at least 18% higher than otherwise expected. Impacts were most modest and short-lived in Los Angeles County with prices increasing between 4% to 10% over the first seven years after investment but diminishing thereafter. The authors attribute the differences in impact to differences in investment strategies across the three locations. On average, investments in Jersey City and D.C. were larger, more concentrated, and directed toward areas that were more disinvested but showed higher signs of rebound, compared to investments made in Los Angeles County.
The researchers conclude that place-based CDBG investments likely caused substantial and long-term increases to local home sale prices within 2,000 feet of the investment. The authors note uncertainty regarding whether their findings can be generalized, given that the authors only studied three locations, each of which had different investment strategies. They call for further research including the examination of impacts on smaller areas such as individual streets, longer studies that can better evaluate the decline of impact overtime, and studies that consider other measures of community impact.
Read the report at: https://bit.ly/4ilJ3N2