Transit proximity and affordable housing investments: Application of Hedonic Model in Des Moines, Iowa
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This study examined the relationship between investments in affordable housing by a non-profit organization (Greater Des Moines Habitat for Humanity- GDMH), proximity to public transit and housing prices in the City of Des Moines, in 2000 and 2018. The hypotheses were: the closer the residential unit is to the GDMH housing investment, the higher the housing price in the surroundings of the residential unit; and the closer the residential unit is to public transit stop, the lower the housing price in the surroundings of the residential unit. The Hedonic model was used with 2000 and 2018 housing prices as dependent variables, 2003- 2014 GDMH investments and public transit proximity as independent variables of interest. In addition, control variables such as housing structural characteristics were included in the models’ specifications.
The estimation results indicated that the relationship between housing prices and GDMH investments at the block groups was negative, opposite to what was found in many past studies. In other words, housing unit closer to the investment locations have a lower price compared to those in distance. Based on the Oaxaca Decomposition test, combining 2000 and 2018 data, GDMH investments at the block groups contributed to a decrease in housing price by approximately $2,940 in 18 years (2000-2018), resulting in a decrease of approximately $163 per year). Even before the GDMH investments were started, the 2000 housing price regression models showed a decline in the areas where the 2003-2014 investments were located. Inclusionary zoning strategy was recommended to ensure that affordable housing provision could have a positive relationship with housing prices (Mukhija et al., 2015).
Moreover, the regression estimation results varied in magnitude for 2000 and 2018. Both indicated that the relationship between housing prices and public transit proximity was negative. For 2000, the estimated coefficients had smaller magnitude than in 2018, illustrating that the situation may got worse. Oaxaca results, combining 2000 and 2018 data, indicated that public transit proximity was positively contributing to housing price until around 90m (increased by around $400) but had a negative effect of around $4,000 when the distance was 500m, during the 18 years (2000-2018). As included in the 2035 DART Plan, increasing frequency and numbers of bus routes were recommended.