Measuring the consequences of promoting inner city homeownership

This paper examines low- and moderate-income households in the City of Philadelphia who are becoming homeowners for the first time. We examine two Nehemiah developments subsidized by the City of Philadelphia that offer newly constructed homes at well-below cost. This paper uses a unique survey of these new owners to measure what Nehemiah residents gain in terms of structure and community attributes as they make the transition from renting to owning, The new owners in the Nehemiah complexes significantly improve their housing structures while raising their exposure to crime and weak local public schools. As part of the City's community development strategy, these developments were expected to increase economic activity near these sites. We document that there is no evidence of local benefit spillovers for census tracts where the Nehemiah developments were built. Our survey results suggest that the new housing developments represent an "oasis" where there are few interactions between the new homeowners and the incumbent residents of the greater community. (C) 2002 Elsevier Science (USA). All rights reserved.