Neighborhood resilience is enhanced by proximity to downtowns, nature & water

This working paper published by the Federal Reserve Bank of Chicago is titled “Accounting for Central Neighborhood Change, 1980-2010“. The authors are Nathaniel Baum-Snow and Daniel Hartley.

The report examines neighborhood resilience and post-2008 revitalization as a function of distances to various natural amenities including coastlines, lakes and rivers.

An earlier report (Lee & Lin, 2014) showed that natural amenities tend to anchor a­ffluent neighborhoods. In other words, neighborhoods near water may be less likely to experience demographic change. It examined the impacts that the quality of the environment and neighborhood affluence have on housing prices. It found that the quality of the natural features mitigates the impact of age on the decline of housing prices, and neighborhood affluence has a positive influence with regard to the impact of age on housing prices across different levels.

But the primary focus of this new Federal Reserve report is actually the enhanced resilience (or rebound-ability) of neighborhoods that are close to central business districts. In other words, the more extreme the sprawl location, the less resilience.

It finds that “Neighborhoods within 2 km of most central business districts of U.S. metropolitan areas experienced population declines from 1980 to 2000 but have rebounded markedly since 2000 at greater pace than would be expected from simple mean reversion. Statistical decompositions reveal that 1980-2000 departures of residents without a college degree (of all races) generated most of the declines while the return of college educated whites and the stabilization of neighborhood choices by less educated whites promoted most of the post-2000 rebound. The rise of childless households and the increase in the share of the population with a college degree, conditional on race, also promoted 1980-2010 increases in central area population and educational composition of residents, respectively. Estimation of a neighborhood choice model shows that changes in choices to live in central neighborhoods primarily reflect a shifting balance between rising home prices and valuations of local amenities, though 1980-2000 central area population declines also reflect deteriorating nearby labor market opportunities for low skilled whites. Rising 1980-2000 central neighborhood home prices were about equally offset by rising amenity valuations among college educated whites; declining amenity valuations reinforced rising home prices to incentivize departures of other demographic groups from central neighborhoods during this period. Greater increases in amenity valuations after 2000 encouraged college educated whites to move in and other whites to remain but were not large enough to offset rising housing costs for minorities.

Download full Federal Reserve working paper (PDF).

See 2014 Lee and Lin report on neighborhood affluence as a function of proximity to natural features.

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