Dissertation Proposal

Linking Neighborhood Housing Market Typologies to Revitalization Strategies: Spatial Analysis

of Residential Investments on Property Values in Baltimore, Maryland (tentative)

April 2010

Lynette Boswell
PhD Candidate
Department of Urban Planning and Design
University of Maryland, College Park

ABSTRACT. This study will examine the link between neighborhood housing market
typologies, revitalization strategies, and the effectiveness of these strategies in neighborhoods in
Baltimore, Maryland. It will analyze the impacts of public residential investments on
surrounding property values across neighborhood housing markets, while considering other
mitigating factors, which include: magnitude and concentration of investments, proximity to
neighborhood assets, and external neighborhood conditions. This study will develop a
neighborhood housing market typology for Baltimore, Maryland, using the cluster statistical
method to evaluate neighborhood change theories and models. Traditional hedonic price
regression models will estimate the effects of residential investments on nearby property values
(using neighborhood housing market typology indicators), and a comparison spatial hedonic
regression model will be used to address spatial dependency and errors.

INTRODUCTION
Neighborhood revitalization strategies have evolved since the Model City program in the 1970s,
downtown reinvestment and Enterprise (EC) programs in the 1980s, the Empowerment (EZ)
and Homeownership programs in the 1990s, to various strategies of targeted Community
Development Block Grant (CDBG) and HOME partnership funds since 2000. Throughout the
late 1970s to the early 1990s, federal policymakers have demonstrated interests in geographically
targeted urban development strategies: however, these past programs have presented mixed or
few results in distressed cities (Oakley and Tsao, 2007, and 2006, and Ladd, 1997). Despite the
presence of targeted redevelopment and investment policies, many cities remain blighted and
economically unstable. Based on these challenges, in the last decade, scholars (e.g. Mallach,
2006, and Galster, Tatian, Accordino, 2006) have encouraged cities to think more strategically of
their place-based methods, and understand the patterns of neighborhood change as well as
regional housing market dynamics to guide city-wide decisions and policies.
Today, weak market cities characterized as economically distressed areas with little market
demand for an excessive supply of housing stock (Mallach, 2006) -- have reconsidered their
efforts, and instead of focusing on massive redevelopment in depopulated areas, they are moving
towards stabilization strategies. Stabilization is defined as gradual neighborhood improvement
and market correction. It is about rebuilding confidence and fostering market recovery. Market
recovery happens when stabilizing actions (vacant homes rehabilitated and new homes
developed) exceed destabilizing events (new foreclosures and homes abandoned) (Mallach,
2006, 2008). The goal of stabilization strategies is to retain population (Mallach, 2006, Galster
et al., 2006) and improve the existing fabric of affected neighborhoods. The general principles
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of stabilization efforts include: 1) understanding the local housing markets; 2) targeting few key
areas; 3) targeting based on community resources and capacity; 4) matching strategies to market
conditions; 5) integrating strategies with other neighborhood strategies; and, 6) leveraging
private investment in more stable areas than heavily distressed neighborhoods (Mallach, 2008;
Mallach, 2006; Galster et al., 2006; Burnett and Brophy, 2003).
Cities such as Richmond, Virginia; Baltimore, Maryland; and Cleveland, Ohio, have begun to
employ these strategies, and spatially concentrate investments in areas exhibiting active housing
markets. A key tool used by these cities to address neighborhood challenges is neighborhood
housing market typologies. Typologies are used to classify neighborhoods into distinctive
categories through quantitative analysis based on housing and socio-economic characteristics.
Once categorized, neighborhood categories are matched with applicable stabilization strategies.
The concept of linking strategies to neighborhood and housing market conditions implies only
certain strategies are successful in different neighborhoods based on neighborhood conditions. It
further suggests neighborhoods exist along a continuum of decline and renewal; therefore, it is
assumed that less stable blocks can be improved through aggressive block level targeting of infill
development and housing rehabilitation, and massive redevelopment, such as demolition and
new construction, will revitalize more distress blocks.
Scholars have proven that strategically targeted investments at the block level present positive
measureable impacts (Galster, et Al., 2006; Galster, et Al., 2004; and Ding, et al. 2000).
However, as a policy tool, this model has not been explicitly tested for accuracy across different
neighborhood housing markets. It is important to question: Is the effectiveness of stabilization
strategies linked to housing market typologies? Under what neighborhood conditions will
strategies more likely stem or reverse neighborhood decline, as indicated by changes in nearby
3

property values? Moreover, how should these strategies be applied based on geographic scale,
proximity to neighborhood resources, or in response to other economic forces- within respective
neighborhood markets?
The purpose of this study is to evaluate the effects of new construction and rehabilitation
residential investments on surrounding properties in varying neighborhood housing markets
through market cluster analyses. This study will use both a traditional ordinary least squares
(OLS) and spatial hedonic regression models to estimate the impacts of residential investments
on nearby property values. These models will be used to determine which neighborhood housing
market indicators influence the impacts of investments on surrounding property values. The
empirical analysis will be applied to Baltimore, Maryland.
BACKGROUND
As summarized in table 1, Baltimores population declined by 17% from 1990 to 2000, and
suffered from slight increases in poverty and unemployment rates. Median household income
also declined, though the Metropolitan Statistical Areas (MSA) average income increased
slightly. Rapid changes among the population, between 1970 and 2000, and declining jobs in
regions surrounding Baltimore negatively impacted housing markets in the City prior to 1998, as
households moved to growing regions with job opportunities. Between 1970 and 2000, a
significant percentage of the population and job growth occurred in counties south and west of
Baltimore City, in Washington DC counties: Montgomery, Fredrick, and Prince Georges
Counties. Jobs in the D.C. metropolitan area increased from 450,000 to 1.1 million,
demonstrating 147% job growth, followed by significant population gains. Baltimore City and

County contain more jobs with 1.5 million jobs in 2000, but did not grow as fast as surrounding
regions.
Table 1: Baltimore Socio-Economic Change from 1970 - 2000

Source: Data adapted from the City of Baltimore Housing Plan, 2005

Massive out-migration from the Baltimore City slightly reversed in the beginning of 2000 due to
expensive housing in and around the Washington DC metropolitan areas. Transportation
linkages to DC jobs, through the Maryland Area Regional Commuter (MARC) train, and more
affordable housing options in Baltimore made the City more attractive to young professionals
(National City of Leagues, 2005). Over a five year period, between 2000 and 2005, Baltimore
experienced an economic resurgence in its housing market due to changing demographics, an
increase in regional housing demand, and small job growth in the Baltimore metropolitan area
(City of Baltimore Housing Plan (BHP), 2005). This led to an increase in market activity among
home sale and new construction. In 2000, median home values were $82,228, and in 2005, there
was an approximate 60% increase to $132,021. Between 2002 and 2005, a total of 17,215
permits for property investments above $5,000 were issued by the City (BHP, 2005). New
construction in the City occurred along the Citys waterfront and edge neighborhoods Clipper
Mill and Cylburn Meadowns -- and increased over 4,000 units from 2000 to 2005. Development
efforts continued past 2005 but were stalled in 2007 due to high foreclosures in new and
redeveloped areas of the City.

1. Housing and Economic Development in Baltimore Neighborhoods

Starting in 1975 through 1995, the City of Baltimore relied on HUDs Community Development
Block Grants (CDBG), HOME partnership, Empowerment (EZ) and Enterprise Zones (EC),
Hope VI, and housing tax credit programs to address older neighborhoods (Cohen, 2000). The
CDBG is a HUD categorical program allocated, at the discretion of the City, to provide housing
rehabilitation loans, public service and facilities, infrastructure, business finance and commercial
revitalization assistance to non-profit economic and housing development organizations, and
private sector groups and households. The HOME Partnership program is also a HUD sponsored
block grant program designed to create affordable housing for low-income households whose
income does not exceed more than 50 percent of HUD- adjusted median income. This program
is the Citys only public assistance grant used exclusively for homeowners and rental, new
construction and rehabilitation investments. The EZ and EC grants, which terminated in 2009,
were used by the City to provide companies located in designated zones with income tax credits,
deduction on business property and tax-exempt facility bonds.
Between 1975 and 2000, the City received $500 million in CDBG funds, (BHP, 2005) $100
million in Empowerment Zones (EZ), and an additional $350 million in Enterprise Zones (EC)
through federal grants and tax incentives (Davis and Brocht, 2002). Prior to 1980, a significant
proportion of this funding was directed toward downtown revitalization efforts (Wong and
Peterson, 1986: 299; and Polese and Stern, 2000: 420) based on the re-development focus of the
CDBG program, and local support from Baltimores private sector and financial industries. By
1990, these funds were concentrated in areas with high percentages of vacant and abandoned

properties to support Baltimores neighborhood organizations, NGOs and Community

Development Corporations (CDCs), on a first-come basis. Since 1992, the City has received
$131 million in HOME partnership funds, representing approximately 15 percent of overall
federal spending in Baltimore, while CDBG dollars represents approximately 55 percent of
federal funds disbursed to the City.
2. Baltimore Neighborhood Housing Market Typology
Federal programs are applied in Baltimore to target disadvantaged groups based on socioeconomic characteristics and not market conditions and/or neighborhood resources. With limited
funding and growing disinvestments in neighborhoods, in 2002, the City Planning Department
categorized its 255 neighborhoods into 55 neighborhood statistical areas1 (NSAs) using the
Citys Real Property Database. Duplicating a real estate analysis of neighborhood markets
developed for the city of Philadelphia by the proprietary group, the Reinvestment Fund; the City
categorized neighborhoods based on housing indicators: abandonment rate, median assessed
home value, and percent homeownership. Data was aggregated to the NSA to represent
neighborhoods. Areas were then categorized into relatively homogenous groups, or clusters
based on neighborhood conditions. The statistical method used to create discrete categories is
called cluster analysis (Miller and Whicker, 1999). This housing market classification scheme is
labeled: a neighborhood housing market typology. The City used the typology to link each

Baltimore neighborhood statistical areas were developed by the Baltimore City Planning Department and the
Family League of Baltimore City, and used by Baltimore City Data Collaborative. Boundaries are based on Citys
neighborhood and community organizations with further consideration for existing census tract boundaries to create
statistical profiles. The concept of NSAs was initiated in 1978 by HUD, for cities wanting to access Section 8
substantial rehabilitation subsidies. Cities were to develop detailed revitalization plans for neighborhoods, with
public and private housing and community development resources to meet neighborhood revitalization needs
(Varady, 1986).

cluster to revitalization strategies, identified as initiatives to stabilize market conditions.

Following are Baltimores 2005 neighborhood housing market typology categories:
1. Preservation: Healthy, attractive areas with high owner-occupancy rates and high
property values. Housing stock which is well maintained and vacancy and abandonment
rates are very low.
2. Stabilization: High home ownership rate, low abandonment, relatively low median home
values, signs of deferred maintenance.
3. Reinvestment: Moderate real estate values, average home ownership rates and substantial
vacancy rates.
4. Redevelopment: Deteriorated housing stock, abandoned buildings and vacant lots,
traditional market forces not working.
The typology was revised in 2008. For finer detail, census block groups replaced NSAs as a
smaller unit of analysis, and the pool of variables was expanded to represent a broader range of
market activities. Additional housing variables included: assessed home values, percent vacant
homes and lots, percent foreclosure, percent homeownership, percent single-family homes,
percent commercial land, and percent residential rental subsidies. The cluster market typology
expanded from four to five categories: competitive and emerging, stable, transitional, and
distressed (Baltimores 2008 definitions, maps, and strategies are provided in Appendix 2).
The cluster analysis of neighborhoods provides an empirical framework for the City to
strategically match public resources to neighborhood housing market conditions, identifying
areas with relatively strong and weak markets. Baltimore along with many other cities, such as
Cleveland, Ohio; Memphis, Tennessee; and Philadelphia, Pennsylvania, are employing
typologies to allocate and target federal government programs and funding. As more cities use
neighborhood typologies to link neighborhood conditions to revitalization strategies and target
resources, it is important to understand the impacts of these interventions in different
neighborhood markets.
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LITERATURE REVIEW
The literature on neighborhood dynamics and change theories, cities investment strategies and
impacts, and neighborhood housing market typologies provide a context to make inferences of
whether and to what extent the effectiveness of revitalization strategies are influenced by
neighborhood housing markets. It also provides a framework to understand what types of
investments are more suitable at different stages in a neighborhoods course of change.
1. Neighborhood Change Theories and Models
Theories of neighborhood change provide a foundation to explain the process of how and why
neighborhoods change or improve over time. Specific neighborhoods are defined by three
dimensions: population, neighborhood conditions, and neighborhood expectations about the
future of the neighborhood (Kolodny, 1983).
Scholars remain inconclusive about which models of neighborhood change theories accurately
portrait cycles of neighborhood dynamics. Common perspectives are bonded in the following
schools: demographic/ecological, socio-cultural/organizational, political economy and social
movements. Classic models of neighborhood change are based in the demographic/ecological
disciplines: (1) the life-cycle, (2) the arbitrage model, and (3) the composition model. The lifecycle model is commonly used in the context of neighborhood planning.
In general, neighborhood change theories consist of two assumptions. First, all neighborhoods
go through a predictable life-cycle, though there is significant contention among scholars
whether decline is an inevitable part of the neighborhood life-cycle. Second, changes in
neighborhoods are influenced by factors which impact individual household behaviors based on
residential preferences. Kolodny (1980) and additional studies (Bruch, 2006; Galster, 1998; and
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Rappaport, 1997) identifies internal and external neighborhood factors which negatively affect
household decisions to leave neighborhoods as push factors, such as: physical decline in housing
stock, commercial, and institutions; out movement of higher income households; and, voluntary
residential preferences based on race, ethnicity or class. Models which reflect the evolution and
changes in the direction of neighborhoods are helpful for cities to plan for and attempt to arrest
decline in areas which experience negative impacts or push factors.
1.1.

Life-Cycle Model

The life-cycle model originated among the urban ecologists of the Chicago School, spearheaded
by David Birch (1971). Birch suggests all neighborhoods exist on an evolutionary continuum
which begins as a stable community and ultimately declines at the end of the cycle. In 1975, the
Public Affairs Counseling (PAC 1975)real estate research corporation, developed under HUDs
Office of Policy Development and Research identified five stages of neighborhood development
based on Birchs2 model of city development: 1) Healthy, 2) Incipient Decline, 2) Clearly
Declining, 4) Accelerating Decline, 5) Abandoned. PAC explicitly indicated abandonment as a
final stage in the neighborhood life-cycle, and suggested it was inevitable. This work was
followed with Downs 1980 model of neighborhood stages with specific descriptions of
neighborhoods at each stage (Downs, 1980: pg. 63-64):

Stage 1: stable and viable. Relatively new and thriving or relatively old and stable
neighborhoods with rising property values with desirable amenities and housing stock
that continue to attract residents to maintain them.

Stage 2: minor decline. Older areas where structural maintenance is beginning to

decline. Minor physical deficiencies are visible and density is higher in area. Property

Birchs evolutionary processes include: low density rural areas (stage 1), wave of development (stage 2), fully
developed high quality residential (stage 3), packing (stage 4: overcrowding, low income immigration, aging
structures), and thinning (stage 5) (Kodolony, 1980). He later tested these factors against New Haven, Connecticuts
1967 census data, and included stage 6: recapture.

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values are stable or increasing slightly. Public services and social status are below stage
1.

Stage 3: clear decline. Rental properties are increasing or dominant in the housing
market. Minor physical deficiencies are visible and overall confidence in the
neighborhood is weak wit increasing abandoned housing. Social status is lower than
stages 1 and 2 because lower income groups predominates the housing market

Stage 4: heavily deteriorated. Housing is very deteriorated and dilapidated, and most
structures are in need of repair. Profitability of rental units is poor and housing is only
being marketed to lower income groups. Abandonment is prolific in the neighborhood
and a pessimistic view of the future of the neighborhood.

Stage 5: unhealthy and nonviable. Neighborhoods are at the terminal point with massive
disinvestment and abandonment. Residents represent the lowest social status in the City
and region. Area is not considered marketable with increasing crime and depleting pubic
services.

Downs analysis placed neighborhoods on a continuum, and suggested change could occur in
either direction along the continuum, and at any stage neighborhoods could be stable, improving,
or declining. In this conjecture, Downs argument differs from PACs conception of
neighborhood change. PAC places neighborhoods and cities in static points along the life-cycle,
all moving towards decline and abandonment; while Downs argues an oscillating process.
Downs claimed specific factors increased neighborhoods susceptibility to decline or revitalize
(Downs, p. 65), and possibilities to reverse decline hinges on the stage of the neighborhood
along the life-cycle continuum. Downs (1981:66) further noted that the effectiveness of
specific policies is influenced by what stage a neighborhood is in when the strategy is applied, all
other factors equal. As a result, neighborhoods in the latter stages of decline present more
difficulty in gradual improvement than those in the earlier stages.
1.2.

Neighborhood Dynamics and Housing Markets

The life-cycle model captures physical variations in the housing market and the socio-economic
characteristics of neighborhoods at different points on the continuum; however, this model
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provides little explanation for how and why households move along the continuum or impetus of
change in neighborhood conditions. Economists Maclennan (1982) and Grisby et al. (1987),
expand this literature by adding another dimensionality to the discussion, and propose individual
households move up and down markets based on their preferences, decisions of neighbors
regarding property maintenance, and location and spatial elements of the neighborhood.
Macleanan and Grisby scrutinized models of neighborhood change in their observations of
neighborhoods through the lens of segmented housing markets. Their contributions to
neighborhood change theories suggest that neighborhoods contain housing sub-markets with
varying economic, social, institutional and demographic forces which impact neighborhood
change. Housing sub-markets are defined as a collection of dwelling units, which offer similar
housing structures, public services, and location amenities (Grisby et al. 1987) within a
metropolitan area or city. Substitutable differences in the mix of housing type, quality of housing
stock, and price of housing units, and in some cases socio-economic characteristic of residents or
location attributes create unique sub-markets (Grisby et al. 1987). Market conditions of the submarket impacts the demand for the neighborhood based on household preferences.
Grisby suggests a filtering model3 concept. He links neighborhood conditions to residents
socio-economic resources, their choices and ability to maintain properties, and decisions to
remain in neighborhoods. Grisby assertions are supported by literature on neighborhood change
and household preferences (Bruch, 2006; Rapaport, 1997). This literature combines

Figure 1: Neighborhood Submarket Indicators and Downs (1980)

Grisby et al. (1987) suggest that households based on their preferences and socio-economic status move up and
Life Cycle Model
down sub-markets through a filtering process. Filtering occurs if upwardly mobile households filter up sub-markets
and are replaced by households in a lower socio-economic group.

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This diagram exhibits the linear process of the impacts of housing market indicators on
neighborhood conditions, which lead to neighborhood stage models. Source: Diagram
adapted from neighborhood stage and housing market frameworks by Downs, 1980; and
Grisby et al., 1987.

concepts of the life-cycle stage model and neighborhood dynamics, and housing sub-markets to
provide a framework to understand the link between housing market conditions, factors which
impact household decisions, and ultimately market forces at the neighborhood level. These
elements can influence how and when cities invest in neighborhoods.
2. Neighborhood Revitalization Strategies and Program Impacts
The successes of neighborhood redevelopment activities are closely linked to theories of
neighborhood change, changing housing markets, and the dynamics socio-economic
characteristics of neighborhoods. Studies which evaluate the impacts of public investments in
cities (Ellen, 2006; Galster, 2006; Popkin, 2004; Zielenbach, 2003; Ding, et al., 2000; and
13

Salaama, 1999) suggest that the aim of the intervention, target groups, and scale of the strategy
are important factors. Since the New Deal program in the 1930s federal programs and funding
have taken different forms to alleviate urban poverty and provide adequate housing to
disadvantage groups (Keating, 1999). Two common approaches of investing in neighborhoods
are city-wide and target-neighborhood revitalization strategies (Mallach, 2009); differences
among these approaches are based on their spatial level of targeting resources.
2.1.

Neighborhood Revitalization Strategies

City-wide strategies are initiatives in which neighborhood revitalization is carried out in all
neighborhoods, or in all neighborhoods eligible for federal resources based on meeting threshold
criteria (Mallach, 2006). Criteria are determined by income or other socio-economic
characteristics. The Model City program and city-wide allocations CDBG funds are examples of
these strategies. Target-neighborhood revitalization strategies differs from the city-wide strategy
which attempts to address all neighborhoods or all neighborhoods meeting a criteria threshold
in that these initiatives target few, select neighborhoods based on priority criteria (Mallach,
2006). Due to limited city resources and substantial city-wide distress, a small number of
neighborhoods are selected and targeted for public investments. Target-neighborhood strategies
may include EZ and EC zones based on selection process or city/ non-profit initiatives which
aggressively target initiatives at the block-level. City-wide and neighborhood-target approaches
are both people- and place-based strategies; however, city-wide strategies tend to be more scatter
site and politically driven. These strategies are explored below.

2.1.1. City-Wide Revitalization Strategies

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The Model City program, a categorical grant program, enacted in 1966 by HUD was the first
city-wide, place-based initiative (Keating, 1999), in the U.S.A. This federal program initially
targeted 75 cities, and later doubled that number for a total of 150 cities, to alleviate inner-city
disinvestment and improve neighborhood conditions. The Model City program concentrated
comprehensive social services, inclusive of bricks and mortar in lower-income communities to
combat urban unrest in mostly minority neighborhoods faced with disproportionately high rates
of poverty and unemployment, racial discrimination in housing and employment, and poor
housing and public services (Keating and Smith, 1996). Initially the programs purpose was to
target a few neighborhoods (Keating and Smith, 1996: 52); however, the implementation of the
program made funding accessible to all neighborhoods which demonstrated negative socioeconomic conditions (Scott, 1969). Criticized for little impact, in 1972, Congress appropriated
$150 million dollars to close out the program and fold it into the CDBG program due to lack of
funding and political support (Keating ed., 1996).
The CDBG program, which stemmed from the conversion of several HUD categorical grant
programs (including Model Cities and Urban Renewal) into a single federal grant, allocated
funding to entitlement communities and urban counties based on annual funding formulas
(Keating, 1999). Still active today, this program is available to communities which demonstrate
significant blight; however, leverage and discretion is given to cities as to where and how they
spend CDBG funds. This flexibility makes the program focus broad and less geographically
targeted towards poor neighborhoods. Minneapolis, Minnesota is an example of a city-wide
strategy which uses CDBG funds as a large scale effort to engage in planning and housing
improvement. CDBG resources are available to all eighty-one neighborhoods in the City,
through allocations vary based on neighborhoods conditions and needs.
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EZ and EC zones developed and administered by HUD in the late 1980s and early 1990s, are
similar in scope to CDBG funding initiatives. Job creation and economic development were
specific focuses of these initiatives. Under the Clinton Administration, the federal government
provided at least $100 million to designated EZs and $3 million to ECs annually over 10 years to
provide tax incentives to businesses located in zones. Six urban areas received EZ funding,
including: Baltimore, Atlanta, Chicago, Detroit, New York, and Philadelphia-Camden, while 65
urban areas received EC funding. Though spatially located, these zones vary based on
populations assisted, and scale, which vary in many cities, from small highly distressed areas to
areas located in or adjacent to distressed neighborhoods (Turnham and Bonjourni, 2004).
2.1.2. Neighborhood- Targeted Revitalization Strategies
Within the last decade cities, have begun to be more strategic in their allocation of CDBG funds
by aggressively concentrating resources in fewer neighborhoods, at the block level for greater
visible impact. The revitalization efforts of cities such as Baltimore, Maryland, and Richmond,
Virginia are examples of target-neighborhood planning. These cities incorporate market-oriented
and data-driven processes that focus on neighborhoods with active real estate markets,
neighborhood assets, and strong neighborhood capacity.
In 1999, the City of Richmond, Virginia, initiated the Neighborhood in Bloom (NIB) program
which targeted eighty percent of CDBG, HOME, and Local Housing Initiative Corporation
(LISC)4, funds in six of 49 neighborhoods representing low to moderate income areas and other
neighborhood assessments using a city-wide neighborhood typology. The city committed
aggressive code enforcement, public safety, community empowerment efforts, and housing
4

LISC is a national organization, which mobilizes corporate, government and philanthropic

support to provide local community development organizations with loans, grants and equity
investments, and technical and management assistance.

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investment resources in neighborhoods with extensive problems (high concentration of vacant

structures and poverty rates) and neighborhoods showing significant signs of decline (low
revitalization capacity and significant number of vacant structures) for two years, and
sequentially expanded the program to include two additional neighborhoods (Mallach,
2006:255). Over a ten year period, crime rates decreased, and property values increased along
with homeownership rates in select low to moderate income neighborhoods (Mallach, 2006).
In 2000, the City of Baltimore partnered with the Healthy Neighborhood Initiative (HNI) to
develop a program similar to NIB. Unlike the NIB program, the HNI is a non-profit led
initiative, which targets approximately one million of the Citys $44 million allocation of CDBG,
HOME, and local bank financial pools, in 15 of 55 Baltimores NSA. Resources are used for
rehabilitation, acquisition, homeownership assistance and neighborhood empowerment efforts,
on selected blocks in selected NSAs. The selection process of neighborhoods was similar to the
NIB initiative. At the census block level, between 2000 and 2006, select neighborhoods
presented positive impacts, such as; a rise in home sale prices and values, fewer vacant units,
decreases in homes remaining on the market for more than 120 days, and increases in the number
of homes sold in target blocks (Boehlke, 2002).

2.2.

Impact of Public Investments on Property Values

Scholars and policy makers present mixed results in the analysis of the impacts of revitalization
programs (see Table 2). Empirical studies (Garvin, 2002; Keating, 1999; and Washnis, 1973)
which evaluate the Model City and Minneapolis program focus on qualitative measures and
participatory processes. Studies which examine the impacts of ECs and EZs commonly use
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difference-in-difference statistical methods, and present some successes in the reduction in

poverty and unemployment within the program zones, and spillover effects in adjacent
neighborhoods (Oakley and Tsao, 2007; and 2006). Empirical studies claim EC and EZ
programs net impacts are minimal due to the large areas targeted, and overwhelming negative
physical conditions and poor socio-economic characteristics of selected neighborhoods (Boarnet,
2001 Papke, 1994; Papke, 1993, Erickson and Friedman, 1990;). Studies which analyze CDBG
spending in cities are also mixed. Galster et al., (2000) analysis of CDBG spending between
1994 and1996 in 17 cities, is not conclusive of whether investments have measureable impacts
due to data limitations, the inability to standardize across cities and account for all factors which
affect community development investments and neighborhood outcomes.

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Ding, et al. (2000) examination of public residential investments in Cleveland, Ohio, presents
more robust findings with the use geographic information systems (GIS) and a hedonic
Table 2: Neighborhood Revitalization Strategies

Source: Table is adapted from ABT Associates (2006), Neighborhood Revitalization and additional
literature which analyze the impacts of neighborhood revitalization strategies from 1960 to present.

19

regression price models. They analyze the effects of investments on surrounding property values,
and conclude impacts are based on distance to investments, scale of investments, type of
investments (new construction or rehabilitation), and socio-economic and demographic
characteristics of the neighborhood. Using spatially lagged variables and interacting income
variables with housing investments, this study demonstrates that positive impacts occurred when
public investments were new construction, large scale, and concentrated (within 150 feet of
rehabilitated investments, and 300 feet of new construction investments), or located in low
income areas with few minorities.
Ellen (2006) and additional studies, which use difference-in-difference statistical methods to
evaluate HOPE VI federal programs and city specific Nehemiah housing projects (Popkin, 2004;
Zielenbach, 2003; and Salaama, 1999), also present similar findings. These studies conclude that
larger, spatially concentrated projects have significant effects on property values, and the greater
distance a property is from the investment, the less effect the investment has on the surrounding
property (Schill et al., 2002 in Galster 2005). Studies which analyze the impacts of
neighborhood amenities and dis-amenities, such as proximity measures to parks (Wachtner and
Gillen, 2006), transportation networks (Abelson, 1979; Wu, 2004), commercial (Ding and
Knaap, 2002) and other socio-economic factors in neighborhoods (Galster, et al., 2004; Lynch
and Rasmussen, 2001; and Jud and Watts, 1981) also reveal measurable impacts. These studies
conclude that positive and negative effects on surrounding property values are linked with the
quality and distance to the amenity or dis-amenity.
Empirical studies of target- neighborhood revitalization initiatives at the block level are few
because these programs are not politically supported based on triage5 policy concerns. Galster,
5

Triage policy is defined as the exclusion of severely declining urban areas from services and programs on the
grounds that the intensity of their needs cannot be met and the provision of services is therefore inefficient

20

Tatian, and Accordino (2006) assesses the impacts of Richmond, Virginias NIB program; the
results demonstrate that block level targeted investments have positive impacts on surrounding
properties. Using adjusted interrupted time series statistical method, their study suggests homes
that were concentrated in large numbers on few blocks produced a greater appreciation in market
values than comparable homes in similarly distressed neighborhoods, controlling for structural
elements and neighborhood conditions.
In summary, studies which evaluate the impacts of CDBG and other federal programs on
property values indicate a need for resources to be concentrated at the block level, and infer that
neighborhood conditions and external factors impact the investments effect. However,
conclusions cannot be drawn on whether strategies impacts have less influence in a relatively
more distressed neighborhood than in a neighborhood that is not as negatively affected. Few
studies explicitly test the impacts of housing revitalization efforts on varying housing
submarkets, and many fail to address additional variables which impact housing markets such as:
located within target reinvestment zones (EZ, EC and Business redevelopment zones), presence
of active neighborhood associations, and proximity variables to neighborhood assets (e.g. parks
and high performing schools).
3. Neighborhood Housing Market Typologies
A thorough understanding of how neighborhoods change over time and the impact of city-wide
or target-neighborhood strategies allow cities to plan for and address changing conditions in
neighborhoods. Neighborhood housing market typologies is a critical tool in this analysis.
Typologies allow cities to capture and categories neighborhood conditions, and link applicable
strategies to address challenges. As a policy tool, neighborhood housing market typologies are
(Marcuse, 1982).

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not new. In the 1980s Goetze and Colton examined housing dynamics, census data, and market
trends in Boston, and identified a link between housing conditions, neighborhood stages, and
public interventions. They used housing conditions as key elements to capture neighborhood
dynamics and change, and developed a two-dimensional conceptual framework for
neighborhood classification.

3.1. Initial Development of the Neighborhood Typology (1980)

Based on life-cycle theories and filtration concepts of neighborhood change, Goetze and Colton
(1980) argued that similar structures built in dissimilar neighborhoods of the same city at the
same time could experience various housing dynamics, thus discounting the life-cycle theory
which focuses on the aging of housing structures and corresponding neighborhood conditions
(1980: 33). Condition and obsolesce, according to Goetze and Colton, did not go hand in hand.
To demonstrate this, Goetze and Coltons created a neighborhood classification system of
neighborhoods similar to life-stage models, analyzing the following indicators: rising sales price,
turn-over rates, vacant units, foreclosures and tenure. Based on housing indicators, Goetz and
Colton developed a market dynamic matrix to identify three market types: rising (more
applicants than vacancies), stable (supply and demand balance out), and declining (fewer
households seeking to remain than available dwellings). Each market type was coupled with
corrective measures to address neighborhood conditions. Measures or strategies to counteract
market conditions included: assisting residents in upgrading efforts and constructing additional
housing for good areas; providing code enforcement, tax incentives and repairs for fair areas;
and, relocation, demolition, and homesteading for poor areas.

22

By monitoring and analyzing market changes through neighborhood classification, Goetze and
Colton inferred that cities could intervene and create environments to build household
confidence and ensure households remain in the neighborhood; or, improve neighborhood
conditions to attract new households. In this framework, city interventions impact householders
decisions, and indirectly impact neighborhood conditions and markets. Whereas Downs argue
the effectiveness is based on neighborhood stages, Goetze and Colton suggest effectiveness of
the intervention relies on the citys ability to counteract neighborhood dynamics, and increase
demand where housing markets are weak (1979:34).
3.2. Neighborhood Housing Market Typology (2000)
More than 20 years later, numerous cities such as Richmond Virginia; Baltimore, Maryland;
Philadelphia, Pennsylvania; Cleveland, Ohio; Chicago, Illinois; Flint, Michigan; and,
Indianapolis, Indiana, are employing Goetze and Coltons neighborhood market classification
technique through the development of neighborhood housing market typologies. Methods and
statistical analysis, and purposes for typologies differ among these cities, but the general concept
remains the same: provide an understanding of neighborhoods strengths and weaknesses, and
prescribe reuse strategies to effect change or stimulate market forces (Mallach, 2006).
3.2.1. Typology Methods
Cities typologies consist of several methods to categorize city neighborhoods into distinct
housing market typologies. Simple methods consist of z-scores (Cleveland, Ohio Typology
(2003)) or descriptive data aggregated to census blocks into categories based on levels of distress
or market criteria (Mallach, 2003). A more common, robust method is the statistical cluster

23

analysis, which provides several methods to categorize neighborhoods based on selected

neighborhood indicators.
Cluster analysis is an empirical technique developed in the 1930s by social scientists and further
defined by biologists in the 1960s (Julnes, 1999; Johnson and Wichern, 1996) to explore
patterns and relationships among various phenomenons. Cluster analysis refers to the
classification or ordering of entities into similar groups or classes to explain a phenomenon.
Similarities among groups or classes are presented in meaningful categories which involve,
clusters of objects that display small within-cluster variations relative to the between-cluster
variation (Julnes, 1999: 295). Meaning, the object represents the entity, and they are
differentiated by clustering the objects into categories based on measures of similarities, and
each category presents distinct characteristics. Cluster analysis differs from principle component
analysis and factor analysis, which attempt to classify objects and variables based on similarities;
in that this processes does not attempt to identify continuous dimensions. Cluster analyses
identify separate categories to place occurrences or phenomenon.
3.2.2. Defining Neighborhood Clusters
The process of defining a cluster is simple. In clustering analysis, data are not standardized
because the purpose is to develop meaningful variations among variables. A method is used to
create categories based on Euclidean distances or correlation coefficients. Methods include three
solutions: hierarchical methods, iterative partitioning methods, and factor analytic methods. The
hierarchical method is for entities that belong to higher-order clusters, and are used for smaller
sample sizes, while the iterative portioning or K-means methods calculates the multi-dimensional
center of the clusters and then iteratively reassigns the entities into clusters based on whose

24

center is closest (Julnes, 1999:582). The factor analytic method is a categorical version of factor
analysis in which entities are reassigned in this method as the analysis process occurs, and
clustering of objects is based on the characteristics of measured variables. The analysis of
variance (ANOVA) is used to ensure statistically significant differences exist among different
clusters.
Hierarchical and k-means are commonly used methods in the literature to explore submarkets
and other real estate classifications (Bourassa, et al., 1999; and Gershoff, et al., 2009) and to
develop robust neighborhood housing market analyses. In many studies, these methods are
coupled with principal component analysis to initially identify factors or variables, which are
subsequently inputted in the cluster method to develop the typology (Bourassa et al., 1999 and
Weisbourd, 2009). Factor analytic methods are used by practitioners to develop clusters based on
access to data and limited capacity to run more robust models.
3.2.3. Neighborhood Cluster Indicators and Linked Strategies
Cities indicators, housing data, and strategies used to develop neighborhood typologies differ
based on the uniqueness of the city and neighborhood conditions. Following are examples of
neighborhood health variables used in housing market typologies through the cluster analysis
(Based on Philadelphia housing market typology):

Housing tenure
Age of housing
Percentage of units demolished
Percentage of vacant properties
Percentage of properties deemed dangerous or imminently dangerous
Percentage of properties categorized as commercial
Year, value, type, and price of most recent sales
Total count of residential units
25

Percentage of households surveyed with high- and very high-risk credit scores

Commonly used typologies categories with definitions and corresponding strategies include:

Stable (Protection): areas that are well-established and successful, where the goal is to
maintain the existing housing stock and improve services.

Transitional (Revitalization): areas with aging but still viable housing stock, often close
to declining industrial areas. The goal here is to invest strategically to enhance
desirability of housing and encourage stability.

Distressed (Redirection): areas with declining incomes and major social service needs, or
whose housing stock cannot compete with housing elsewhere in the city or metro area.
The goal here is to work toward major landscape transformation and attract much-needed
new investment. (Mallach, 2006: Minneapolis Neighborhood Revitalization program).

Table 3 provides market typologies which employ both robust cluster analysis and simpler zscore methodology, from Philadelphia, PA; Baltimore, MD; Cleveland, OH; Memphis, TN;
Kansas, MO; and Indianapolis, IN.
Similar to Goetze and Colton work, which identify matching strategies to address market
conditions, strategies used by cities in table 3 are based on assumptions of neighborhood change
models about local conditions, and mitigating factors to forestall neighborhood decline and
stabilize the supply of housing units and demand. It is assumed that interventions applied in
different neighborhoods based on typologies will influence existing and potential residents
attitudes and long-term expectations about the future of the neighborhood. For example,
neighborhoods which exhibit high vacancy rates, low homeownership, and substantially low
household incomes may be classified as distressed neighborhoods, and the corresponding
strategy to address the distress is to redevelop neighborhood blocks or redirect investments
around existing neighborhood assets. Massive demolition of vacant and abandoned properties
may be more appropriate for this market type based on neighborhood stage models because
vacancy rates are high and units have deteriorated.
26

Table 3: Neighborhood Housing Market Typologies

27

3.3. Gaps in the Current Literature

Two significant gaps in the current literature which address the link between neighborhood
market typologies and revitalization efforts are limitations in the development of neighborhood
housing market typologies and the lack of robust, spatial models which identify investments
impacts on surrounding property values.
3.3.2. Development of housing market typologies
Julnes (1999) notes the cluster analysis process is simple, and straightforward, however, the
cluster analysis is still an emerging statistical method and is not extensively supported by a body
of statistical reasoning literature. In most typologies, the variables are observed over a one to
two year period which provides very little indication of neighborhood change demonstrated by
the turn-over in housing units, population change, and other variables, or capture neighborhood
change or dynamics. The focus on real estate activities ignores other neighborhood quality
elements, which influence neighborhood choice, residential mobility, and impact market forces.
Examples of these elements include: crime, quality of neighborhood schools and business
establishments (Galster, et al., 2006; Galster et al. 2000; and Sampson, et al., 2002).
Additionally, little information is provided on threshold levels of how strategies should change
over time based on neighborhood improvement or movement along the continuum. Studies have
used cluster analyses to develop typologies to define housing submarkets (Bourassa, et al.,
1999), but the literature does not apply these methods to evaluate where or within which housing
market the intervention is more likely to be effective. Therefore, the use of typologies to
evaluate and prescribe program interventions must be re-examined to address neighborhood
change indicators, expand to include more socio-economic variables which define housing
28

markets, and create a clearer understanding of transitions of neighborhoods across market type
when interventions are applied.
3.3.3. Exploring Spatial Hedonic Regression Models
Hedonic regressions and difference-in-difference variations of hedonic models are commonly
used in studies to evaluate the impact of housing investments, and these studies attempt to
address spatial dependence and capture non-fixed spatial variables and neighborhood effects
through the phenomenon of spatial drift of coefficients6 (Can 1990 and 1992; Ding, 2000).
Though methods are robust, OLS regression model may be insufficient to capture spatial
dependence in housing markets through spatial interaction and diffusion effects, hierarchies of
place and spatial spillover. In the last ten years, studies have begun to employ the geographic or
locally weighted regression (GWR) models to analyze spatial impacts, through spatial hedonic
regression models.
Spatial hedonic regression models, developed by Anselin (1988 and 1990), are used to
investigate spatial non-stationary estimates, and capture variability in the quality of amenities,
which is limited in the conventional hedonic model using OLS((Cho et, al., 2006; and
Weissbourd, et al., 2009). These models ability to capture housing markets spatial dependence
are generally found in studies valuing the quality of the environment (Carruthers and Clark,
2009; and Cho et, al., 2006), which apply GWR models to estimate the marginal implicit price
and series of implicit demand functions to describe the relationship between the price of distance
from environmental amenities and dis-amenities. Comparing the classic hedonic regression
model with spatial model, studies show improvement in the predictive ability of the model and
ability to address highly correlated variables due to spatial dependence. GWR models are not
6

Spatial drift of coefficients attempt to capture neighborhood effects by using interaction terms, a concept built
upon by the interaction of Cartesian coordinates with housing attributes to generate a unique location values (Fik et
al., 2003 in Carruthers et al., 2009).

29

constrained by rigid boundaries and may inform policy makers on the spatial impact of
investments.
The next section provides a detailed development of the research question to guide this project.
RESEARCH QUESTION
This study will address the relationship between neighborhood market typologies and
stabilization efforts with one specific question:
1. To what extent do varying market conditions, as a measure of neighborhood housing

market typologies, impact the effectiveness of residential housing investments in

neighborhoods? Effectiveness will be measured as positive or negative impacts on
surrounding residential sales prices. There are four mitigating factors to consider. (1)
Magnitude; (2) Concentration; (3) Proximity; and (4) External Neighborhood conditions
A. Is the effect based on the amount of public investment put into the neighborhood?
B. Is the effect based on spatial concentration or density of investments?
C. Is the effect based on whether investments are located within targeted
reinvestment zones?
D. Is the effect based on whether investments are in proximity to
neighborhood/community assets?
E. Do other neighborhood conditions or spatial aspects such as surrounding
redevelopment projects, or other unique neighborhood indicators (organizational
structure of neighborhood groups) influence stabilization efforts?
These questions will be examined within each market typology, and addressed through
quantitative and qualitative analysis based on five hypotheses.
Hypothesis 1:
The first hypothesis states the effects of residential investment on nearby property values is
based on where neighborhoods exist within a market continuum. To test this hypothesis,
Baltimore block groups will be divided into neighborhood housing market typologies. Block
30

groups will represent the neighborhood unit of analysis. This step will be completed using the
statistical cluster technique to isolate four to five typologies. Typologies will include stable,
minor decline, clear decline, heavily deteriorated, and declined. This hypothesis assumes singlefamily homes in fewer distressed markets will have a greater appreciation than homes in more
distressed markets.
Hypothesis 2:
This hypothesis addresses public investment. Based on the amount of public investment in each
market typology, the value of single-family homes in minor decline markets will experience
increases in values and require less public investment, while more distressed markets will require
higher investment for positive change (Galster, 2005). All things equal, this assumption is based
on the Citys ability to leverage private and existing homeowners investment in neighborhoods.
It assumes public investment in minor decline markets will result in a greater increase in
property values than the same investment in distressed markets. Alternatively, more public
investment will be needed in distressed neighborhoods than in minor decline markets to achieve
the same increase in property values.

Hypothesis 3:
This hypothesis addresses the spatial concentration of investments. Current literature states
targeted and highly concentrated investments achieve greater impact because investments are
sustained and highly visible (Galster, 2006, Ding, 2000, and Ellen, 2001). Therefore, nearby
property values will be positively impacted if they are located in areas where public residential
investments are highly concentrated. These effects may differ by market typology. This

31

hypothesis assumes that the value of nearby single-family homes located in areas with high
concentrations of city investments will experience increases in housing values in comparison to
single-family homes in areas with low concentrations of city investments.
Hypotheses 4 through 5:
The last two hypotheses address proximity and neighborhood externalities. The first hypothesis
addresses and controls for proximity to neighborhood assets, such as community institutions,
parks, or public transit options. The second hypothesis attempts to control for major
redevelopment projects, such as HOPE VI projects or housing and commercial developments in
the City based on spill-over effects. Both hypotheses assume proximity to these elements will
positively or negatively impact property values (Mallach, 2006; Accordino and Johnson, 2000;
and Rapaport, 1997). Additional neighborhood variables, such as active neighborhood groups,
will be included in the model and qualitative analysis will be completed.
METHODOLOGY
1.
Cluster Analysis
A hybrid cluster analysis using the hierarchical and alternate version of K-means cluster method
will be used to develop the neighborhood housing market typology for Baltimore City. A
neighborhood housing market typology currently exists for the City; however, there are
significant limitations in the variables selected to define neighborhood change and neighborhood
health indicators. This study will identify four to five housing market types to be developed
through the cluster analysis, and assumes that there is a statistical relationship between increases
in property values across neighborhood market types. Two cluster models for 1990 and 2000
will be developed to complete descriptive analysis of neighborhood transition between

32

neighborhood types, and impacts of investments across market types. A cluster analysis will also
be completed for 2004/2005 data.
2. Empirical Model
The hedonic price regression method is a common technique used to determine the effects of
neighborhood attributes on housing prices. This method is used to determine the estimated
demand for housing attributes and the impact of public services and interventions. Hedonic
models estimates property values based on structural variables, such as housing type, number of
bathrooms, heating units, and presences of a garage, or basement (Ding, 2000). Neighborhood
variables include: institutions, services and public safety; and distance measures such as distance
to the central business district, employment centers and transportation nodes (Knapp and Ding,
2003; and Ding, 2000). Additional, socio-economic variables or indicators which impact
households opportunities and neighborhood services and conditions, based on John Powell
seminal work7 will be included.
For this model, this study assumes there is a relationship between neighborhood market
conditions and the effect of residential investment on nearby property. Sales in 2004 and 2005,
within 150 and 300 feet of the residential investments, will be used to determine impact. Studies
identify 150 to 300 feet as measurable distances to analyze new and rehabilitation residential
investments (Ding, 2000, and Ellen, 2001). These steps will require the use of GIS to measure
distance variables and capture investments around home sales. The basic model is expressed as:
R = f(S, N, NR, IR)
Where
7

John Powell (1999) work focus on the effects of race, poverty, and urban sprawl in the U.S.,
and highlights lack of access to regional opportunities create poverty, and significant
barriers for residents.

33

R= rent (sale price);

S = Structural characteristics;
N = Vector of socio-economic neighborhood characteristics (including location variables);
IN = Vector of investment of new construction; and
IR = Vector of rehabilitation; and
e = error term
Thus the model is:
ln (R) = (0 + 1S+ 2N + 3NR + 4IR +e) (Model 1)
Due to the non-linear form of prices and values, the dependent variable, sales price will be used
as a common form semi-log of home sales price for this model. The structure attributes and
neighborhood characteristic variables will represent control variables.
To address the research question of public investments and level of concentration or scale, a
second model will extend the basic model to include public investment expenditures and density
of investment. These investments will be measured at the block level, and will include dummy
variables for total cumulative city residential investment below $20,000 and above $20,000
(Galster, 2001). Concentration (number of HOME investments within 150 and 300 feet) and
scale measures (number of housing units in a building) will be based on the number of
investments and number of housing units in the investment, respectively. This impact will be
tested using the spatial drift of coefficients phenomenon. This approach is used in Ding (2000)
study, and is a common approach to capture spatial lagged variables and neighborhood effect in
the hedonic model. Additionally, other variables which demonstrate neighborhood market
conditions such as: household income, foreclosure rates, and homeownership rates will also be
included as interaction variables.

34

Each variable will be interacted with HOME Investments, and form the following model:
ln (R) = (0 + 1S+ 2N + 30NR + 40IR+ 31NR*N+ 411R*N +e) (Model 2)
Targeted reinvestment zones, such as Baltimores Healthy Neighborhood Initiative blocks, Main
Street Reinvestment area and other neighborhood initiatives, and areas with strong neighborhood
groups, will be included as a third model to control for other neighborhood effects and
externalities. Strong neighborhood organizations will be represented in the model with groups
which have operating support above $20,000. Lastly, proximity measures using geographic
information systems will be used to identify sales in proximity to neighborhood assets such as
parks, high achieving schools, and other large public investments.
OLS models will be followed by a second stage demand function and geographic weighted
regression model to address spatial dependences and auto-correlation specifications.
3. Definitions and Measures: House Price, Stabilization and Neighborhood Unit
3.1.
House Price
Housing prices are extensively used in empirical studies to examine home investment impacts on
neighborhood conditions, quality, and spill-over effects (Ellen, et al., 2001; Ding, 2000; Ding and
Knaap, 2003; Galster et al., 2005). This variable is an imperfect measure of quality, and is
influenced by residents socio-economic status, neighborhood amenities, and dis-amenities, and
public services (Ding and Knaap, 2003). House price is commonly used to capture
neighborhood effects and included in studies as a common form semi-log of home sales price,
due to its non-linear form.
3.2. Neighborhood Unit

35

There is little consensus among scholars in defining the urban neighborhood (Galster, 2003;
Grisby et al., 1987). Neighborhoods are defined based on natural or political boundaries,
characteristics of householders, or even by sub-markets and housing structural types. For the
purpose of this study, the neighborhood unit will be defined based on Census block groups. A
Census block is the smallest level of geography designated by Census Bureau, and generally
approximate actual city street blocks in urban areas (US Census). Units in close proximity will
share common attributes and tend to be classified in the same sub-market (Galster, 2003);
therefore, the Census block group unit of analysis was selected to represent the neighborhood
unit.
3.3. Data Set
The data set for this study will include three sources: 1990 and 2000 census, Maryland Property
View, and Baltimore Department of Housing and Community Development (BDHCD) (see table
4-7). The study will focus on the City HOME funds. HOME partnership is administered by
HUD and provided to cities to create affordable housing for low-income households. A local
government can use HOME funds for grants, direct loans, loan guarantees and other forms of
credit enhancement, or rental assistance. Eligible households for HOME assistance vary with the
nature of the funded activity. For rental housing and rental assistance, at least 90 percent of
benefiting families must have incomes that are no more than 60 percent of the HUD-adjusted
median family income for the area. For rental units, at least 20% of the units must be occupied
by families with incomes that do not exceed 50% of the HUD-adjusted median. For households,
incomes must not exceed 80 percent of the area median. These requirements may impact which
market housing investments are located.

36

For the City of Baltimore, HOME Partnership funds are used for rehabilitation and new
construction of owner and rental residential properties. HOME housing investment data
includes: new construction and rehabilitation collected from 1998 through 2003. The (BDHCD)
provides information on the location, amount, type (new construction or rehabilitation), and year
of HOME Partnership investments. This data will be linked with Maryland Property View data
for additional information on the structural elements of housing units and socio-economic data
compiled from the US census. Data will include sales prices of single-family, owner-occupied,
arm-length transactions in 2004 and 2005. This timeframe was chosen to capture city sales
activity before the significant, negative impact of the economic and housing market crisis which
occurred in 2006 through 2009.
The 2000 Census will be used to obtain data on the block level, including socio-economic and
housing characteristic neighborhood indicators. Socio-economic data will include income,
education, and employment rates. Housing variables will include homeownership, occupancy,
age, structural variables, and number of units. These data will be complemented with Maryland
Property View data which includes structural elements on properties, sales data and assessed
values. Additionally, Maryland Property View data provides verification on occupancy data and
type of transaction.

TIMELINE
I plan to finalize and defend this proposal in April 2010. During the months of May, June, and
July of 2010 I will complete data collection. During June and July of 2010, interviews will be
37

conducted with neighborhood groups, organization and City departments to discuss

neighborhood activities. From August to November of 2010, I will complete data analysis, run
model, and begin to write up the analysis findings. I anticipate defending the dissertation in the
fall semester of 2011.

38

Table 4: Data Variables

39

Table 5: Data Set Variables (Continued)

40

Table 6: Data Set Variables (Continued)

41

42

1. APPENDIX
1.1.
1.2.
1.1.

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Baltimore Neighborhood Market Typology Map A1, 2

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Competitive
Neighborhoods in this category, like Federal Hill, Canton and Homeland, have robust housing markets
with high owner-occupancy rates and high property values. Foreclosure, vacancy and abandonment rates
are all very low. Most direct market interventions are not necessary in the Competitive market Basic
municipal services such as street maintenance are essential to maintaining these markets. While densities
do vary single-familydetached homes predominate and these areas typically dont have a mix of housing
types.
Emerging

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Neighborhoods in the Emerging category, such as Abell, Hampden and Mt. Vernon, have robust
housing markets but with home ownership rates slightly below the citywide average; this category
appeals to property owners interested in tapping into a strong rental market Median sales price is above
$244,000. Additional incentives for development and investment in the Emerging market would
recognize its potential for growth. There is more variety in housing types and more commercial areas
than in the competitive cluster.
Stable
This cluster includes neighborhoods such as Reservoir Hill, Lauraville and Violetville. Median sale price
is around $160,000 and the rate of foreclosure is just below the City average of 5%. In Stable markets,
the City should consider stabilizing and marketing any vacant houses. Traditional housing code
enforcement is also essential to maintain the existing housing stock. Home ownership is still significant
at 55%.
Transitional
Neighborhoods in the "Transitional" category, such as Allendale, Belair Edison and Kenilworth Park, are
found typically at the inner edge of the stable neighborhoods. These neighborhoods have moderate real
estate values with median sale prices between $80,000-$100,000, with higher median sales in areas with
commercial land uses. Foreclosure rates are slightly higher than average, but occupancy rates are still
higher than average. This cluster also has the highest rate of rental subsidy. The City should support
homeowners who may be facing economic hardships due to the national economy.
Distressed
These neighborhoods, which include Middle East, Penn North and Westport, have nearly 4 times the
levels of vacant homes and vacant lots as found in other categories. Sale prices typically range from
$36,000 - $40,000. Distressed markets tend to rely on comprehensive housing market inventions, such as
site assembly and tax increment financing. One of the six criteria for identifying the Growth Promotion
Areas includes neighborhoods located in distressed markets. Demolitions in the Distressed markets
should be clustered to create potential for greater public safety as well as marketability. The housing type
here is predominately rowhouse.

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