Study of TNDs’ impact on values raises eyebrows

A study in the winter issue of the Journal of American Planning Association (JAPA) tried to determine the effect that three different kinds of development exert on housing values in low-income areas of Chicago.

One was infill development, which involves a small number of parcels on existing city blocks. Another was traditional neighborhood development (TND), which the authors said occurs “where empty parcels are numerous enough to permit the construction of extensive, contiguous new housing.” The third was “enclave” development, which has its buildings and roadways designed to achieve isolation from the surrounding area. Of the three, TND and enclave development were larger in their scale.

TND was relatively urban in its character, whereas the enclaves tended to be insular. Small-scale infill development turned out to be associated with the highest values (documented through city assessments). Authors Brent Ryan and Rachel Weber went on to conclude that infill housing appears to command a value premium, compared to TND and enclaves. The authors speculated that consumers value housing that is “integrated into the urban context over housing dissociated from it.”

They argued that TNDs and enclaves are “homogeneous” and not well integrated into their surroundings. New urbanists who examined the study found several reasons to question the conclusions. First, those who were familiar with the projects noticed that the infill developments studied were often better designed than the TNDs, and met new urbanist goals more effectively than the TNDs did (even though TNDs are explicitly intended to embody New Urbanism’s principles).

The study suffered from the fact that assigning a category to a development — such as TND or small-scale infill — says little about the quality of its urban design and its appearance on the street. Second, many of the TNDs consisted of HOPE VI public housing redevelopments, according to Payton Chung of the Congress for the New Urbanism in Chicago. Proximity to, or inclusion of, public housing therefore could affect TND values, presumably for the worse. Third, the study based its findings on assessed values after completion of the project rather than actual sale prices.

And it did not look at changes in assessed values, Chung noted. The authors said they limited their study to distressed neighborhoods (identified as such in 1990). But values in such neighborhoods can vary widely, and therefore the starting value is important. Fourth, the infill development was largely clustered closer to the Loop than were the other developments — a fact clearly shown in the map accompanying the article. Closer to the Loop is where neighborhoods experienced significant gentrification in recent years, when the data were gathered. Fifth, the authors did not take into account whether the developments were private or public. Private developments tend to be located in areas of higher values. Public housing redevelopments — that is to say, HOPE VI projects — tend to be built in areas with the lowest values.

As Ryan and Weber note, previous studies, including the landmark Eppli and Tu Valuing the New Urbanism, have found value premiums for TND design. For all of these reasons, the conclusion that small-scale infill raises housing values more than TND in economically distressed areas seems highly suspect.