Does Large-Scale Neighborhood Reinvestment Work? Effects of Public?Private Real Estate Investment on Local Sales Prices, Rental Prices, and Crime Rates

During the 1990s, the U.S. Department of Housing and Urban Development awarded over $6 billion in competitive grants (HOPE VI) to spur neighborhood redevelopment. We add to HOPE VI research by examining the impacts of a large set of public?private real estate investments, including HOPE VI, made over a 16-year period in a distressed neighborhood of Pittsburgh, Pennsylvania (Hill District). We estimate the effects of $468 million additional public?private investments that Hill District received compared with a demographically similar neighborhood on sales prices, rental prices, and crime. We find large, statistically significant impacts of these investments on residential sales prices, commercial sales prices, and on rental prices, and a marginally significant yet meaningful decline in nonviolent arrests. For each $10 million of public?private investment, we find a 0.95%, 2.7%, and 0.55% increase in residential sales prices, commercial sales prices, and rental prices, respectively. Given the accumulated difference over 16 years of $468 million in these investments across the two neighborhoods, the percentage increases amount to large changes in prices over that time. Cities should anticipate the potential impacts of major neighborhood investment on low-income households, especially unsubsidized renters who most directly experience the brunt of rising rents.