364 equivalent housing the rent levels to whites in the transition areas were approximately 7% less than the levels in all-white tracts. If the operating expenses were the same for the equivalent housing, this then suggests that the value of housing occupied by whites in the transitional neighborhoods was depressed. Thus, both of the studies that specifically examined the transitional areas concluded that property values in those neighborhoods declined with the introduction of nonwhites into those areas. In conclusion, it appears as if race can have a significant impact on housing values, but that the nature of the relationship varies from city to city and sometimes within cities from neighborhood to neighborhood, depending on the demand for and supply of housing for nonwhites as compared with that for whites, the duration of time that the neighborhood has been undergoing transition, and what is happening in adjacent neighborhoods. The housing market is a local market with different reactions in different submarkets. It may be that the reason the researchers are unable to generalize their results is that they have failed to take into account all of the specific value-determining factors for each site, many of which vary from site to site as well as from neighborhood to neighborhood. BIBLIOGRAPHY 1. Bailey, Martin J., "Effects of Race and of Other Demographic Factors on the Values of SingleFamily Homes," Land Economics, May, 1966, pp. 215-220. 2. Davis, J. Tait. "Sources of Variation in Housing Values in Vashington, D.C.." Geographica! Analysis. January, 1971. pp. 63-67. 3. Emerson, Frank C.. "Valuation of Residential Amenities: An Econometric Approach." The Appraisal Journal. April. 1972, pp. 268-278. 4. Haney, Richard L.. Jr.. "Some Determinants of the Value of Housing Services." Unpublished Doctoral dissertation, Indiana University, 1974. 5. Kau. James B., Price Discrimination in Housing." Paper presented at the 1972 National Winter Meetings of the Operations Research Society and the Institute of Management Science, New Orleans, Louisiana. December 30, 1972. 6. Kain, John F., and Quigley, John M.. "Measuring the Value of Housing Quality," Journal of the American Statistical Association, June, 1970. pp. 532-548. 7.. "Note on Owner's Estimate of Housing Value." Journal of the American Statistical Association. December. 1972. pp. 803-806. 8. King. A. Thomas, and Mieskowski, Peter, "Racial Discrimination, Segregation, and the Price of Housing." Journal of Political Economy. May/June, 1973, pp. 590-606. 9. Kish. Leslie, and Lansing. John B.. "Response Errors in Estimating the Value of Homes," Journal of the American Statistical Association. September. 1954, pp. 520-538. 10. Ladd. W. M.. "Effect of Integration on Property Values." American Economic Review, September, 1962. pp. 301-802. 11. Lapham. Victoria. "Do Blacks Pay More for Housing?" Journal of Political Economy. November/December, 1972, pp. 1244-1257. 12. Laurenti, Luigi. Property Values and Race: Studies in Seven Cities. Berkeley, Calif.: University of California Press, 1960. 13. Mullendore, Walter E., and Cooper, Kathleen M.. "Effects of Race on Property Values: The Case of Dallas." The Annals of Regional Science. December, 1972, pp. 61-72. 14. Muth, Richard F.. Cities and Housing. Chicago: University of Chicago Press. 1969. 15. Page. Alfred N.. "Race and Property Values." The Appraisal Journal. July, 1968. pp. 334-341. 16. Pascal. Anthony H.. The Economics of Housing Segregation. Santa Monica, Calif.: Rand Corporation [RM-5510], 1967. 17. Ridker. Ronald G., and Henning. John A., "The Determinants of Residential Property Values with Special Reference to Air Pollution." Review of Economics and Statistics. May, 1967. pp. 246-257. 18. Straszheim, Mahlon R., "An Econometric Model of Urban Housing Prices and Neighborhood Incomes." Paper presented at the Winter Meetings of the Econometric Society. Toronto. Ontario. Canada, December 30, 1972. INNER CITY VALUATION STUDY On September 24, 1974, Richard A. (Dick) Bowler, chairman of the DEDICATION Public Affairs Committee, pass^d away. The final draft of the report had just been completed. This report, which was originated, formulated and, to a great extent, written by Mr. Bowler, is just one example of his dedication to the profession and to his country. The Public Affairs Committee and task force wish to dedicate the completed product to the memory of Richard A. Bowler SUMMARY OF CONCLUSIONS Factors prevalent in each locality which contributed to the defeat of some subsidized housing programs: • Value of residential properties within the inner city was not directly related to the economic level of the residents. (see page 2) • Relaxation of HUD regulations qualified more families for home ownership in older, declining areas where the economic life of the community was relatively short. (see page 2) • Financing terms were extended and subsidized with the intention of creating a greater incidence of ownership. (see page 2). • The 1968 Housing Act, in effect, converted inner city tenants into homeowners by introducing a social factor into the valuation process. (see page 3) • Low income families who were qualified for FHA financing generally had little or no knowledge of the responsibilities of home ownership. (see page 4) • Market data applied initially were fictitious in some instances or developed from an unrelated economic base. (see page 4) • Emphasis on production caused FHA staff expansion without time for adequate training, and the employment of individuals as FHA inspectors and fee appraisers with limited qualifications and experience. It also influenced the employment of fee personnel who were not qualified to recognize physical and structural defects. (see page 5) The availability of government-insured financing created a market which enabled the transfer of ownership of substandard properties to low income families at a cost of ownership beyond the economic capacity of the purchaser. (see page 6) The spot rehabilitation of properties in the inner city did nothing to arrest the rate of deterioration of a neighborhood. (see page 6) • The crime rate in a given community has a direct relationship on use, occupancy, and value of a property. (see page 6) • Delay in acquisition by legal aspects of foreclosure proceedings generally resulted in the total destruction of the property by vandalism and the elements. (see page 7) • The apathy of some local public officials toward code enforcement and neighborhood services continues as a major factor in neighborhood decline. (see page 8) • The first major repair expense was a contributing factor in the abandonment of homes. (see page 9) INNER CITY VALUATION STUDY · PUBLIC AFFAIRS and TASK FORCE COMMITTEE MEMBERS Richard A. Bowler, SRPA, MAI, chairman William E. Coyle, Jr., SREA, MAI Joseph A. Nowicki, SREA, MAI *Deceased September 24, 1974 |