Supportive Housing and Neighborhood Property Value Externalities

We analyzed impacts on single-family home prices of eleven, small-scale supportive housing facilities announced in Denver during 1989-1995. Using a difference in differences econometric specification, we found that these facilities produced a positive impact on house prices within 1,001 to 2,000 feet. We attributed this effect to countervailing externalities (building rehabilitation vs. resident behaviors) that vary in their spatial extent. Supportive housing facilities were systematically sited in neighborhoods with declining relative prices compared to elsewhere in the census tract. This location bias led a conventional econometric specification to erroneously estimate a negative property value impact from supportive housing.