Property values in inner-city neighborhoods: The effects of homeownership, housing investment, and economic development

This article examines the determinants of property values in Cleveland with a focus on three approaches to improving or maintaining neighborhood quality: investing in new housing, attracting and retaining homeowners, and encouraging economic development. Data comprise home sales in 1996 and 1997, investments in new housing from 1991 to 1995, homeowner migration between 1991 and 1995, and changes in the number of business establishments from 1991 to 1995. The results suggest that (1) investments in new houses have a positive impact on housing values, especially for houses close to the new investment; (2) homeowner out-migration has a negative effect; and (3) growth in the number of business establishments, except for social service establishments, also has a negative effect. These results further suggest that while programs to encourage housing investment and homeownership can increase neighborhood property values, care should be taken to avoid an inappropriate mixing of land uses.