Working Paper

An analysis of the neighborhood impacts of a mortgage assistance program: a spatial hedonic model

Abstract: Down-payment or closing-cost assistance is an effective program in addressing the wealth constraints of low- and moderate-income homebuyers. However, the spillover effect of such programs on the neighborhood is unknown. This paper estimates the impact of the City of Dallas Mortgage Assistance Program (MAP) on nearby home values using a hedonic model of home sales from 1990 to 2006. We define neighborhoods of 1,000 feet around each sale and estimate the average differences in sales prices between neighborhoods with various numbers of MAP properties before and after their appearance. We find that MAP properties tend to locate in neighborhoods with lower property values; however, unless a concentration of MAP properties forms, the infusion of MAP properties has little detrimental impact on neighboring property values. Moreover, low concentration of MAP properties has a modest positive impact on surrounding property values.

Keywords: Housing policy; Mortgage loans; Home ownership; Housing subsidies;

Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Working Papers

Publication Date: 2010

Number: 1001

Note: Published as: Di, Wenhua, Jielai Ma and James C. Murdoch (2010), "An Analysis of the Neighborhood Impacts of a Mortgage Assistance Program: A Spatial Hedonic Model," Journal of Policy Analysis and Management 29 (4): 682-697.