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The Economics of Housing Renovation: Three Empirical Studies Author: Andrew C. Helms Dissertation School: University of Illinois at Urbana-Champaign Pages: 91 Publication Date: August 2002 Availability: Access Number: 10776 Abstract: From case studies and even casual observation, the characteristics of gentrified neighborhoods—and, by extension, the probably determinants of urban housing renovation—are easily identifiable. However, nearly all existing empirical studies in the literature have found that these characteristics (with the exception of building age) are insignificant as predictors of residential renovation. Moreover, while the influence of "neighborhood effects" has been recognized in the literature, only one study has formally analyzed the interdependence of households' renovation decisions with spatial econometric techniques. This paper fills both gaps in the literature. Two detailed microdata sets document renovation activity among hundreds of thousands of buildings in two different cities and 5-year periods: New York in the late 1960s, the birthplace and early years of gentrification; and Chicago in the late 1990s, where recent residential revitalization has been brisk. The first two chapters definitively establish the determinants of housing renovation in an empirical framework that is comparable to previous studies. The consistency of the results across the two cities and time periods attests to the conclusions' robustness. Using an aggregated version of the Chicago data, the third chapter estimates several parameterizations of a spatial lag model to empirically analyze the endogeneity of households' renovation decisions. The results not only indicate that neighborhood effects are strongly influential, but also suggest that many building and neighborhood characteristics may not, in fact, be determinants of renovation but rather are proxies for spatial neighborhood effects. |
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