An Analysis of the Neighborhood Impacts of the Mortgage Assistance Program in Dallas

Abstract

Down-payment or closing cost assistance is a commonly used and effective program in addressing the wealth constraints of underserved homebuyers. This paper estimates the impact of the city of Dallas Mortgage Assistance Program (MAP) on neighborhood home values. We define neighborhoods for each sale based on distance from MAP properties, and estimate the difference-indifference (DID) in home prices between neighborhoods with various numbers of MAP before and after MAP sales. We find that while MAP properties tend to locate in neighborhoods with generally lower property values, the infusion of MAP has no detrimental impact on neighboring property values overall.

An analysis of the neighborhood impacts of a mortgage assistance program: A spatial hedonic model

“…Di, Ma, and Murdoch (2007) found that the mortgage default rate and foreclosure rate of MAP were lower than that of subprime loans in Texas—the likely alternative for LMI households. MAP loans also outperformed FHA loans in Texas.…”

“…An appropriate neighborhood definition is critical to studying the impacts on “neighbors.” Previous studies, such as Di, Ma, and Murdoch (2007), defined neighborhoods using the U.S. census block groups to examine the impact of MAP. Despite the convenient access to block group–level demographic information, the census boundaries tend to define areas that are too large.…”

“…Smith and Hevener (2005), Schwartz et al (2006) and Ellen et al (2007) found that place‐based revitalization projects have significant positive spillover effects on the surrounding neighborhood. Di, Ma, and Murdoch (2007) analyzed the experience of Dallas Mortgage Assistance Program (MAP) participants and found no evidence of adverse impact of a high concentration of MAP properties on block group median home values. However, their analysis is subject to the possible selection of MAP participants into block groups and the potential endogeneity of block group demographics.…”

An Analysis of the Neighborhood Impacts of a Mortgage Assistance Program: A Spatial Hedonic Model

“…While the city's percentage of LMI households with severe housing cost burdens in 2000 was 23.1 percent, for those listed in the database, the average back-end ratio, or the ratio derived by dividing total monthly debt by monthly gross income, was 36 percent. Di, Ma, and Murdoch (2007) found that the mortgage default rate and foreclosure rate of MAP were lower than that of subprime loans in Texas-the likely alternative for LMI households. MAP loans also outperformed FHA loans in Texas.…”

“…Smith and Hevener (2005), Schwartz et al (2006) and Ellen et al (2007) found that place-based revitalization projects have significant positive spillover effects on the surrounding neighborhood. Di, Ma, and Murdoch (2007) analyzed the experience of Dallas Mortgage Assistance Program (MAP) participants and found no evidence of adverse impact of high concentration of MAP properties on block group median home values. However, their analysis is subject to the possible selection of MAP participants into block groups and the potential endogeneity of block group demographics.…”