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Crowd Out, Stigma, and the Impact of Low-Income Housing Tax Credit and Public Housing on Neighborhoods Author: Michael D. Eriksen Dissertation School: Syracuse University Pages: 66 Publication Date: 11/2006 Availability: Access Number: 5016 Abstract: This paper investigates impact on housing markets of the nation's largest rental housing supply subsidy, the Low-Income Housing Tax Credit (LIHTC). Two separate (crowd-out and stigma) effects are identified on theoretical grounds to exist, with differences for each effect based on geographic and neighborhood income distance. Specifically, LIHTC housing is hypothesized to produce a negative amenity effect (stigma) in high-income neighborhoods compared to a positive effect in the low-income areas. These differences between neighborhoods are expected to attenuate with geographic distance. This is contrasted with crowd-out effects that are expected to stay relatively constant across neighborhoods and geographical spaces. An empirical model is derived to estimate these hypothesized effects on unsubsidized rental construction and changes in property values and rents during the 1990s. GIS-techniques are utilized to construct concentric rings of 1/2 to 10 miles in radius for each census tract based on its neighborhood income status at the start of the decade. The paper finds that for every 100 units of LIHTC construction, 50 fewer unsubsidized rental housing units were constructed during the 1990s. Significant localized differences, however, exist between neighborhoods based on income status. Using 1/2-mile circles, the construction of 100 LIHTC units is associated with 80 fewer unsubsidized rental constructions and a 6-percent decrease in owner-occupied property in the highest third of income neighborhoods. In contrast, 100 units of LIHTC construction in the lowest third of income neighborhoods is associated with 17 more unsubsidized rental construction and a 1-percent increase in property values. |
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