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HOPE VI: An Analysis to Determine theHOPE VI Program's Influence on HomeSalesLaTanya N. Brown aa Department of Accounting, Finance, and Economics , School ofBusiness, Bowie State University , Bowie, MD, USAPublished online: 29 May 2009.

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HOPE VI: An Analysis to Determine the HOPE VIProgram’s Influence on Home Sales

LaTanya N. Brown

Department of Accounting, Finance, and Economics, School of Business,Bowie State University, Bowie, MD, USA

This article will examine the original Housing Opportunity for People Everywhere (HOPE) VI sites

in the cities of Atlanta, Baltimore, Charlotte, and Washington, D.C., to determine if surrounding

home sales increase after its completion. The author utilizes an Adjusted Interrupted Time Series

(AITS) method, first developed by Galster, Temkin, Walker, and Sawyer (2004), to examine the

effects of the HOPE VI program on local real housing prices (which is utilized as a proxy for local

economic development in this paper and in previous urban economic research). The author found

that the prices of housing units in the HOPE VI concentric rings of a half mile and 1mile around

the HOPE VI site increased after completion. The results also showed that the housing price

trend around the HOPE VI site began to increase after the completion date of each site. The price

trend of housing units in the inner ring of the HOPE VI sites grew more than those in the outer ring.

Therefore, the results indicate that the HOPE VI site has a significant and positive influence on

housing prices.

Keywords: HOPE VI, neighborhood, public housing, real estate

INTRODUCTION

The Housing Opportunity for People Everywhere (HOPE) VI program has attempted to

transform the physical and socioeconomic make up of traditional public housing. HOPE VI

differs from traditional public housing programs in that it was purposely designed by the Depart-

ment of Housing and Urban Development (HUD) to focus on urban, social, and economic

development. The new and rehabilitated housing units were not only intended to enrich the

urban landscape but to implement economic and social training programs to increase the

self-sufficiency of HOPE VI residents (Wexler, 2001). By changing the economic climate of a

neighborhood in a more holistic manner, planners and policy makers hoped to attract businesses

and hence employment opportunities for local residents. Many supporters believed the HOPE VI

program changed the off-putting view of affordable housing, while opponents of the program

voiced concerns over the issues of displacement, income mobility, and local economic growth.

The author would like to acknowledge to Department of Housing Urban Development (HUD) for funding this

research through a 2001 HUD Dissertation Grant.

Address correspondence to LaTanya N. Brown, Ph.D., 5603 3rd Place NW, Washington, D.C. 20011. E-mail:

lnbrown@bowiestate.edu

Community Development, 40: 54–63, 2009

Copyright # Community Development Society

ISSN: 1557-5330 print

DOI: 10.1080/15575330902918980

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This article will focus on addressing one of the basic questions about the HOPE VI projects:

Did the program induce local economic development? The author addresses this question by

utilizing housing prices as a proxy for local economic development. An increase in housing prices

is due to an increase in demand for homes in a neighborhood. This increase in the demand for

homes in a neighborhood causes an increase in business activity, which creates employment

and thus local economic growth through development. For over 40 years, the proxy of housing

prices has been established by various urban economists. Nourse (1963) and Schafer (1972) first

studied the effect of public housing on neighborhood housing prices by using control areas, and

both studies indicated that public housing projects did not increase surrounding property values.

Galster, Tatian, and Smith (1999) and Ellen, Schill, Schwartz, and Voicu (2007) studied a similar

issue using a more disaggregated method, applying spatial dependency theory (introduced by Can

& Megbolugbe, 1997), to help determine the impact of subsidized housing programs on housing

price levels and trends compared to its broader area.1 Galster et al. utilized the entire city to com-

pare changes in housing prices, while Ellen et al. used only homes within the zip code that were

not part of the study area. Galster et al. concluded that large concentrations of Section 8 house-

holds caused a negative impact on housing prices, while Ellen et al. established that a larger

New York City subsidized housing program moderately increased housing prices. Galster, Tatian,

and Petit (2004) evaluated the impact of supportive subsidized housing in Denver, Colorado. Their

research differed from previous spatial dependency theory through the utilization of comparison

areas that counteracts the locational biases associated with a supportive housing area.

Like the HOPE VI program, Armstrong, Wells, and Wood (2000) questioned the causal

impact of community economic development due to the outlined objectives of politically

targeted sites. Galster, Temkin, Walker, and Sawyer (2004) attempted to correct the casual

effects of housing price changes in a neighborhood by evaluating the impact of community

development corporations on housing values. Galster et al. developed the Adjusted Interrupted

Time Series (AITS) method. This method estimates the pre- and post-intervention slopes and

levels of the targeted neighborhood by comparing the neighborhood housing values with a con-

trol set neighborhood. The AITS method is utilized to examine the economic impact of event

through an interruption in the time series modeling analysis. The methodology is derived from

the quasi-experimental research design developed by Shadish, Cook, and Campbell (2002). The

quasi-experimental design examines the effect of an experimental outcome by utilizing variables

that lack random assignments. Galster et al. (2004) was the first to utilize this methodology on

place-based initiatives that could have possibly been targeted for development. This article will

utilize the AITS methodology developed by Galster to understand the economic impact of the

HOPE VI project on area changes in level and trend of real housing prices surrounding the site

and its comparison areas.

This article will examine HOPE VI sites located within the cities of Atlanta, Georgia,

Baltimore, Maryland, Charlotte, North Carolina, and Washington, D.C. The author seeks to

prove that the HOPE VI program brings about increased housing prices. An increase in housing

prices near the HOPE VI site will reflect the capitalization of amenities associated with the

affordable housing development. A rise in home prices is also an optimistic expectation among

homebuyers for the revitalization of the HOPE VI neighborhood.

The process of selecting comparison areas for the HOPE VI site was developed with

the understanding that before the existence of a HOPE VI site there was a traditional public housing

site within each of the communities in this study. Therefore, when choosing a suitable comparison

INFLUENCE OF HOPE VI ON HOME SALES 55

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area for the HOPE VI neighborhood, the author decided upon a traditional public housing site

within each city that did not receive HOPE VI grant funding. The traditional public housing site,

however, had economic and demographic characteristics similar to the HOPE VI neighborhood.

Therefore, it is hypothesized that due to the social and economic mobility programs of the HOPE

VI program, real housing prices will increase to a greater degree after the completion of the HOPE

VI sites in comparison to a traditional public housing neighborhood. Citywide, structural, and

neighborhood characteristics, along with space and time, were controlled for in the model. The units

of analysis were homes sold in a HOPE VI or comparison neighborhood.

HOPE VI

The National Commission on Severely Distressed Public Housing (NCSDPH; 1992) was chosen

by Congress in 1989, to devise a National Action Plan to eradicate the severe circumstances of

America’s public housing crisis. In 1992, the HOPE VI program was conceived by the Commi-

ssion to transform public housing and eliminate physical and socioeconomic isolation. Many

traditional public housing programs received grants to move these communities from public

housing to the HOPE VI program.

The Department of Housing and Urban Development describes the HOPE VI program as

‘‘the engine driving the revitalization of the nation’s most distressed public housing develop-

ments by providing grants and unprecedented flexibility in site design and community imple-

mentation to address the housing and social service needs of the poorest residents’’ (2008,

Summary sect.). Rhode Island Senator Jack Reed (2008) stated that the HOPE VI program

was the only significant source of federal money for new housing and new opportunities. The

overall guidelines of the HOPE VI program were based upon three conditions of need estab-

lished by the Commission, which are (a) physically deteriorated buildings, (b) residents living

in destitution and generally needing high levels of social and support services, and (c) economic-

ally and socially distressed surrounding communities (NCSDPH, 1992).

In response to the first condition, the HOPE VI program helps to rehabilitate or to demolish

traditional public housing sites and to construct an infrastructure that encompassed the urban

design of its existing community. In 1995, Congress established the Recession Bill, which

eliminated a long-standing statutory requirement that all demolished public housing had to be

replaced on a one-for-one basis. The eradication of this requirement gave all housing authorities

with HOPE VI grants the option of removing units without replacing them with new ones (Abt.

Associates, 1996). With the development of the HOPE VI site, Public Housing Authorities

(PHAs) now have the ability to replace the existing units with fewer homes. The rehabilitation

and demolition sites screen new and returning residents before offering housing, but the likeli-

hood of retaining the original public housing residents is higher for the rehabilitated sites. The

rehabilitated sites usually relocate existing residents to another section of the public housing

community, while the demolished sites offer vouchers to many residents for building and devel-

oping from the ground up. Previous public housing residents of the demolished sites were given

the option of returning if they pass that particular site’s screening process.

The second condition focuses on the destitution of, and the high level of assistance needed

by, HOPE VI’s public housing residents. The Commission found many of the residents living

in the public housing projects were the poorest of the poor (Abt. Associates, 1996). The majority

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of residents were from African-American, low-income, and female-headed households; these

demographic characteristics predisposed many residents to economic and social destitution.

Many other factors, such as drugs and crime, contributed to the destitution of residents. To

remedy this situation, local housing authorities developed methods for helping HOPE VI resi-

dents to become self-sufficient (Abt. Associates, 1996). Many sites developed welfare to work

programs, along with housing counseling seminars and job training. These programs were seen

as potential bridges between dependency and independence for HOPE VI residents.

Lastly, the Commission documented the social and economic blights of the surrounding

community. Their solution was to establish resident and community participation within the

overall development process in mixed-income communities. This idea came out of research

by scholars that stressed the importance of mixed-income housing and community development

on the future economic outcomes of children.

HOPE VI is unique for its ability to tailor what works for the program to its surrounding

community, based upon the overall mandate (to provide designed construction and cost-

effectiveness in the management of housing for low-income persons; Abt Associates, 1996).

While the HOPE VI programs were established to address the conditions identified by the

Commission, each individual program was allowed to design and implement site development

in whatever way the PHA saw fit for their particular HOPE VI project.

METHODOLOGY

Exploring Traditional Public Housing Comparison Areas

Before the construction of the HOPE VI sites, there existed a traditional public housing site that

did not encompass mixed-income or income mobility programs. Many researchers have studied

the economic and social effects of the traditional public housing sites on area neighborhoods

(Briggs, 1999; Chandler, Benson, and Klein, 1993; Nourse, 1963; Rabiega, Lin, and Robinson,

1984). Through this and other research on public housing, Congress established the National

Coalition of Severely Distressed Public Housing to find solutions to this problem; the solution

was the HOPE VI program, which encouraged economic and social growth for the residents and

its surrounding community. Not all traditional public housing sites received HUD grant funding

to transform sites into the HOPE VI program.

Traditional public housing sites that did not receive grant funding were evaluated and selected

by the author to become comparison areas for this paper. The author specifies comparison areas

for each of the designated HOPE VI projects by incorporating Census and Tax Assessment

descriptive data. This process is performed to insure a close match between the HOPE VI site

and the traditional public housing comparison site for the period prior to the implementation

of the HOPE VI project. The data gathered helped to determine if there were differences in eco-

nomic and demographic characteristics after the completion and occupation of each HOPE VI

site.2 For this study, the traditional public housings sites and neighborhoods were similar to

the HOPE VI sites and are utilized as comparison areas. The author chose to use traditional pub-

lic housing neighborhoods as its comparison area instead of citywide comparisons because of the

understanding that before there ever was a HOPE VI site within the experiment neighborhood

there was a traditional public housing site similar to the comparable neighborhoods in this study.

INFLUENCE OF HOPE VI ON HOME SALES 57

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While city variations, neighborhoods, housing structure characteristics, space, time, and seasons

are controlled for in this model, having an area very similar to HOPE VI neighborhood (before

there existed a HOPE VI site) is the key to comparing like or similar communities. The compar-

ison neighborhoods had similar demographic and economic characteristics as the HOPE VI

neighborhoods before its construction and completion. For this article, the center of each com-

parison area and HOPE VI area will contain a traditional public housing site or a HOPE VI site,

respectively; they will be referred to as neighborhoods. This comparison of similar neighbor-

hoods allows for further analysis of the effects of the HOPE VI sites on area housing prices.

Figure 1 examines the demographic characteristics of the HOPE VI and traditional public

housing neighborhoods before the implementation of HOPE VI. For each city, African

Americans were the majority population in both the HOPE VI neighborhood and its comparable

traditional public housing neighborhood.

Table 1 displays the unemployment rates of both the HOPE VI and traditional public housing

comparison neighborhoods for each city. The author found similar levels of unemployment for

the HOPE VI and traditional public housing comparison neighborhoods for each city in the

sound. Similar results were found in Table 2 which compares neighborhood median income,

population, and race before the completion of HOPE VI using 1990 U.S. Census Data. After

inspection of the demographic and economic characteristics of the above figure and tables, it

can be suggested that the traditional public housing areas chosen as comparison neighborhoods

in this study are reasonable in its attempt.

To test for a HOPE VI impact, the author developed a hedonic price model utilizing the AITS

method that controls for structural, neighborhood, level and trend and other economic factors in

each city’s HOPE VI site and a comparison neighborhood from 1988 to 2002. The dependent

FIGURE 1 Demographic characteristics of the HOPE VI and traditional public housing comparison areas before the

completion of HOPE VI. (Source: 1990 U.S. Census).

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variable is the natural log of real housing prices.3 The methodological approach of this paper

marks a departure from the previous work of Galster et al. and Ellen et al., which did not include

data from selected comparison areas. The comparison areas for this study contain traditional

public housing sites that encompassed similar demographic and economic characteristics as

the HOPE VI site before completion.

Model Specifications

The model is specified below:

Ln P ¼ b0 þ b1Sþ b2Q � Y þ b3N þ b4Cþ b5ALLH60:5 þ b6ALLH61 þ b7A H60:5

þ b8A H61 þ b15H6time0:5 þ b16H6time1 þ b15H6tPOST0:5 þ b16H6tPOST1 þ e ð1Þ

TABLE 1

Unemployment Rate

Atlanta

Traditional public housing 14.3

HOPE VI 10.3

Baltimore

Traditional public housing 11.8

HOPE VI 12.2

Charlotte

Traditional public housing 12.3

HOPE VI 18.3

Washington, D.C.

Traditional public housing 15.2

HOPE VI 15.9

Source: 1990 U.S. Census.

TABLE 2

Economic and Demographic Comparisons

Median household income Population Median rent

Atlanta

Traditional public housing $13,162 1,991 $295

HOPE VI $14,243 1,948 $336

Baltimore

Traditional public housing $20,769 3,916 $411

HOPE VI $18,836 2,845 $378

Charlotte

Traditional public housing $21,135 3,230 $369

HOPE VI $21,142 2,227 $331

Washington, D.C.

Traditional public housing $35,760 2,752 $512

HOPE VI $44,526 2,600 $534

Source: 1990 U.S. Census.

INFLUENCE OF HOPE VI ON HOME SALES 59

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Where:

LnP Natural log of housing sales prices.

b0 Constant parameter to be estimated.

C A dummy variable used for equation one (the combined model only) to control for variations within the

HOPE VI housing price model. If a house was sold in Washington, the Washington dummy variable

will receive a one; otherwise a zero.

S Vector of structural characteristics of the home, including home and lot size, age, building materials and

type, and numerous amenities.

N Vector of neighborhood characteristics including median income, travel time to work, and employed

persons.

Q *Y Vector of dichotomous variables indicating the time (year and quarter) of the sale of the house, it is a

seasonal and yearly measure.

ALLH60.5 Dummy variable, which equals 1 if the house is located within 0 to .5miles of the HOPE VI site before

and after the HOPE VI site was completed, and zero otherwise.

ALLH6a1 Dummy variable, which equals 1 if the house is located within .501 to 1mile of the HOPE VI site before

and after the HOPE VI site was completed, and zero otherwise.

A H60.5 Dummy variable, which equals 1 if the house is located within 0 to .5mile of the HOPE VI site and was

sold after the HOPE VI site was completed, and otherwise zero.

A H61 Dummy variable, which equals 1 if the house is located within .501 to 1mile of the HOPE VI site and was

sold before the HOPE VI site was completed, and otherwise zero.

H6time0.5 A continuous variable representing homes within 0 to .501mile distance of the HOPE VI site that

indicates the number of months and years between the times when the house was sold in relation to the

completion of the HOPE VI sites were completed and occupied. It captures the sales before and after the

HOPE VI site was completed within the HOPE VI area and zero otherwise.

H6time1 A continuous variable representing homes within .501 to 1mile distance of the HOPE VI site that

indicates the number of months and years between the times when the house was sold in relation to the

completion of the HOPE VI sites were completed and occupied. It captures the sales before and after the

HOPE VI site was completed within the HOPE VI area and zero otherwise.

H6tPOST0.5 A continuous variable representing homes within 0 to .5mile distance of the HOPE VI site that indicates

the number of months and years between the times when the house was sold based on the time the

HOPE VI sites were completed and occupied. It captures the sales only after the HOPE VI site was

completed and zero otherwise.

H6tPOST1 A continuous variable representing homes within .501 to 1mile distance of the HOPE VI site that

indicates the number of months and years between the times when the house was sold based on the time

the HOPE VI sites were completed and occupied. It captures the sales only after the HOPE VI site was

completed and zero otherwise.4

The key independent variables are a set of dummy and trend variables, which indicated

location and time of sale of properties located in the inner ring and outer ring of the HOPE

VI project. If it is found that the coefficient for housing units located in the inner ring of the

HOPE VI site (A H6a0.5) is significant and positive, then it could be concluded that the HOPE

VI program does induce higher housing prices after completion. Furthermore, if the coefficient

for housing units sold in the outer ring of the HOPE VI neighborhood, after the completion and

occupation of the HOPE VI program (A H6a1), is also greater before completion of the HOPE VI

program, one could argue that the impact of the HOPE VI site goes beyond the first ring’s radius

of one-half mile.5 Time trend key variables, (H6time and H6tPOST), moreover represent the long-

term effects of housing prices after the HOPE VI program’s occupation and completion. The

value of these variables is zero (0) for dates prior to the completion of the HOPE VI project,

and rise with the length of time sold after the completion of the project. A city dummy variable

is included in this model to control for otherwise undetected variations among cities. The vari-

able H6time evaluates the trend in housing prices in the HOPE VI neighborhood independent of

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the completion date of the site, while the H6tPOST captures the trend of housing prices after the

completion date. If the H6tPOST coefficients are significant and larger than H6time coefficients,the results will suggest a positive long-term upward effect within the HOPE VI site neighborhoods.

Data

The data used for the dependent variable for the models come from the proprietary First

American Real Estate Solutions (FARES) property characteristics and sales data. FARES is a

firm that specializes in collecting tract level property and housing data from various municipal

districts and counties. Property characteristics (number of rooms, square footage, age, amenities,

and the type of structure) from the FARES database were used to specify the structural housing

characteristics. The addresses for the housing data were geocoded using HUD’s Community

2020 mapping program to match the street addresses with latitude and longitude coordinates

and census geographic identifiers (state, county, tract and block). The implementation of the

geocoded data component was used to create the H6 and TPH variables discussed earlier.

Results

As mentioned earlier, not all traditional public housing sites were transformed into HOPE VI

sites. The process of selecting and creating a HOPE VI sites varies among municipalities and

various HUD approval grants. Therefore, one may assume that the effect of the HOPE VI site

may be greater because of political and strategic urban planning initiatives. To control for this

variation, the author selected similar traditional public housing comparison areas and then con-

trolled for casual effects of the development and completion of the HOPE VI site by incorporat-

ing pre and post space and time trend variables into the model (ALLH6a0.5, ALLH6a1 A H6a0.5,A H6a1 H6time0.5, H6time1.0, H6tPOST0.5, and H6tPOST1.0). Galster et al. (2004) incorporated a simi-

lar control analysis in his work. The mode used in this study includes the pre and post effects of

the location of the HOPE VI sites by including homes sold in the inner and outer ring of the

HOPE VI neighborhoods regardless of completion date (ALLH6a0.5, and ALLH6a1). The

variables ALLH6a0.5, and ALLH6a1 are compared to the A H6a0.5, and A H6a1 variables, whichrepresent homes sold in the inner and outer rings of the HOPE VI neighborhoods after comple-

tion of the HOPE VI site. The distance of a half mile (inner ring) and 1mile (outer ring) sur-

rounding the HOPE VI sites and comparison neighborhoods offers a significant number of

observations for the 10-year timeframe, which creates robust analysis and results. The pre and

post coefficients for the inner ring of the HOPE VI site (ALLH6a0.5 and A H6a0.5)showed that, after the completion of the HOPE VI site, the coefficients had a positive but insig-

nificant effect on area housing prices. The HOPE VI outer ring neighborhood not controlling for

completion of the site showed a statistically significant decline in housing prices, by �20%.

After completion (A H6a1.0) of the HOPE VI site, the equation significantly increased housing

sales prices, by 18%. These results explain that the completion of the HOPE VI neighborhood

overall significantly increased housing prices in its outer most ring.

The model also reflects the effect of time and trend in relation to the completion of the

HOPE VI project. The variables that capture the pre and post time trend effect of the HOPE

VI neighborhoods are H6time0.5, H6time1.0, H6tPOST0.5, and H6tPOST1.0. The results show that

INFLUENCE OF HOPE VI ON HOME SALES 61

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the trend variables that capture housing sales prices post completion (H6tPOST0.5, and

H6tPOST1.0) of the HOPE VI site are positive and significant in both the inner and outer

rings, while the variables that encompass the overall trend in housing sales prices (H6time0.5,and H6time1.0), regardless of completion of the HOPE VI site, are both negative and signifi-

cant only in the outer most ring. After the completion the HOPE VI sites, housing prices in

the inner ring of the HOPE VI site increased by 9% per year and 5% per year in the outer

ring of the HOPE VI site.

CONCLUSION: IMPLICATIONS OF FINDINGS

The results of the HOPE VI model indicate that the price of housing units in the HOPE VI

concentric rings of a half mile and 1mile (respectively) around the HOPE VI site increased after

completion. Additionally, the results also showed that the housing price trend around the HOPE

VI site began to increase after the completion date of each site. The price trend of housing units

in the inner ring of the HOPE VI sites grew more than those in the outer ring. Therefore, the

results indicate that the HOPE VI site has a significant and positive influence on housing prices

which can be viewed as a viable proxy for local economic development, as stated in the literature

section of this paper.

Overall, the results from this study indicate that the HOPE VI program has achieved, in part,

its goal of stimulating economic development. This finding is true to the extent that strengthen-

ing housing prices reasonably reflects economic development in a local neighborhood. It is rea-

sonable to conclude that an increase in neighborhood housing prices, as found here, will increase

property tax revenues and allow additional public services to be provided to foster well-rounded

economic development in a newly revitalized neighborhood.

NOTES

1. Spatial dependency theory examines the interdependency between the subsidized housing site and nearby homes

that were sold. Spatial dependency theory also incorporates localized fixed effects, which are effects that only examine

the factors and levels that the researcher is interested in drawing conclusions about.

TABLE 3

Results

Variable Parameter estimate Standard error t value Pr> jtj

Key variables

AllH6a0.5 �0.01933 0.05976 �0.32 0.7464

AllH6a1.0 �0.20153 0.02907 �6.93 <.0001

A H6a0.5 0.14108 0.09494 1.49 0.1373

A H6a1.0 0.17876 0.03794 4.71 <.0001

H6time0.5 �0.00518 0.00771 �0.67 0.5012

H6time1.0 �0.01172 0.00346 �3.38 0.0007

H6tPOST0.5 0.09347 0.03149 2.97 0.003

H6tPOST1.0 0.04805 0.01271 3.78 0.0002

Note. Adj. R-Sq 0.5; Observation 15,819.

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2. The demographic characteristics were race and population. The economic characteristics were average housing

price of homes sold over the study period, median rent, median housing prices, number of employed individuals, and

median household income.

3. Utilizing the Housing Price Index (HPI) for each city normalized real housing prices. Office of Federal Housing

and Enterprise Oversight (OFHEO) provided HDI.

4. This model examines two areas surrounding the HOPE VI site and public housing areas. To correct for spatial

heteroskadasticity the latitude (X) and longitudes (Y) were normalized from the central business district and placed

within the model in the form of X, Y, XX, YY and XY.1 The concept for remedying this issue comes from the works

of C&M (1997) as well as Galster (2000). The omitted dummy variable is housing units sold before the occupation

and completion of the HOPE VI program. The rationale for omitting the before HOPE VI variable is to represent a

relative difference of the most distressed areas during a specific time period.

REFERENCES

Abt. Associates. (1996). Historical Baseline Assessment of the HOPE VI Projects. Vol. 1. Prepared for Department of

Housing and Urban Development.

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