Spatial Heterogeneity in Spillover Effects of Assisted and Unassisted Rental Housing

Abstract

Three new contributions are added to the literature on subsidized rental housing impacts on nearby property values: 1) A primary focus on the spatial heterogeneity of these effects which warrants caution regarding citywide results; 2) an analysis by zoning area, and 3) a comparison of impacts with unsubsidized apartments. An adjusted-interrupted time series (difference-in-difference) model is estimated with a comprehensive dataset for Seattle, WA (1987-97). Contrary to NIMBY expectations, the predominant impact is an upgrading effect of lower-value areas. However, spillover effects are very sensitive to how data are pooled across space: The citywide upgrading effects are driven by poorer pockets adjacent to affluent areas with no or small effects in more diverse low- and medium income areas. They only occur in single-family, not multi-family zones. The only negative effects were associated with vouchers in one of the affluent areas. Impacts of unsubsidized rentals are very similar to those of subsidized ones, suggesting an independent effect beyond subsidy status. These findings are explained with Seattle's dispersion and good neighbor policies, with gentrification pressures as a possible alternative explanation. Site visits confirmed the location of subsidized sites in lower-value areas and the higher maintenance quality of subsidized vis-à-vis unsubsidized units.