An overgrown vacant lot or an abandoned house can quickly drag down an entire street. For municipal leaders, these blighted properties represent both a safety hazard and a financial drain, requiring thousands of dollars each year for trash removal, mowing, and structural safety checks. While replacing these eyesores with affordable homes sounds like an obvious solution, local governments and private lenders often hesitate. In neighborhoods already dealing with flood risk or economic hardship, investors frequently worry that pouring money into single lots will fail to attract buyers or produce any lasting financial return.
A study published as an NBER working paper offers concrete evidence on what happens when a city systematically tackles this problem. The investigation tracked two decades of publicly funded housing revitalization across Savannah, Georgia. The findings reveal that transforming abandoned urban parcels into affordable housing can boost the market value of neighboring properties by 11 percent, while concentrated redevelopment on a single block can increase surrounding property values by up to 35 percent.
Tracking Two Decades of Infill Housing
The research was conducted by Edward W. Chen of Princeton University alongside Reagan L. Lengefeld and Omar Isaac Asensio of the Georgia Institute of Technology. The team focused on Savannah, a major port city where historic neighborhoods contend with both long-standing economic disparities and elevated climate risks, such as coastal storm exposure and regular flooding. City officials estimated that blighted parcels cost local taxpayers roughly $5.6 million annually, or about $1,300 per property, in maintenance and uncollected taxes.
To curb this drain on municipal budgets, Savannah launched an initiative to construct or renovate homes on vacant, abandoned, and disinvested properties, an approach known in urban planning as infill development. Rather than building large, disconnected apartment complexes, the city constructed single-family residences designed to match the architectural style of surrounding streets. These homes were set aside for residents earning less than 80 percent of the area median income, supported by purchase assistance programs to help existing community members buy them.
Chen and his coauthors gathered historical records on 396 city-funded infill projects completed between 2004 and 2019. To observe what happened to nearby real estate, the researchers built an automated web-scraping program that extracted 2.43 million annual assessment records from the Chatham County Tax Assessor database, covering 104,836 individual parcels between 2001 and 2022. They also combined this parcel information with a federal climate and economic screening tool, local geographic mapping records, and census data.
Measuring the Reach of a Single Lot
Evaluating the economic ripple effects of public housing investments is notoriously difficult. Properties chosen for infill development are rarely average; they sit in older, lower-income areas with unique neighborhood characteristics. If researchers simply compare nearby houses to homes in wealthier parts of town, any observed price differences will reflect historical neighborhood divides rather than the housing program itself.
To establish a balanced baseline, the team applied an advanced statistical technique called genetic matching. This method matched properties near infill projects with nearly identical reference properties across Chatham County based on age, building size, room count, neighborhood income, and distance to public parks. The authors then tracked assessment changes over time using a staggered difference-in-differences analysis, an approach that accounts for projects completed in different years without skewing long-term trends.
The calculations showed that properties immediately next to an infill project, within roughly 25 meters, gained an 11.3 percent boost in appraised value compared to their matched counterparts. This premium translated to an average gain of $3.61 per square foot. However, the benefits dropped off rapidly with distance. At 50 meters, the increase fell to 5.7 percent, and at 75 meters, it reached 4.6 percent. By 100 meters, roughly the length of a single city block, the spillover effect faded entirely.
The researchers also analyzed how long these gains endured. Tracking properties over multiple years revealed that adjacent parcels experienced a measurable rise in value that persisted for at least six years, reaching its highest level between years two and three.
The Power of Clustering Investments
In addition to examining individual lots, the researchers grouped parcels by city block to test whether the density of investment influenced the outcome. In economic theory, clustering can generate a tipping point where activity snowballs, creating benefits far larger than the sum of scattered, isolated projects.
The team sorted blocks containing infill projects into five groups based on the share of renovated parcels. The analysis revealed a clear threshold effect. On blocks where infill projects were sparse, making up less than 16 percent of total parcels, surrounding properties saw no statistically meaningful change in value.
On blocks with the heaviest concentration of public effort, where infill homes accounted for between 17 percent and 77 percent of all parcels, the results changed dramatically. Surrounding residential values on those blocks climbed by 35.8 percent, or $11.05 per square foot. The authors argue that concentrated investments are necessary to change the economic trajectory of a distressed block, whereas isolated projects spread thinly across a city may fail to move the needle.
Public Payback and Climate Considerations
The study also examined the direct financial return for municipal budgets. Across 361 projects with complete cost accounting, total development spending reached $52.37 million, averaging $145,060 per home. Public dollars served as an effective catalyst: every single public dollar spent helped attract $2.07 in private matching funds through local land banks and lenders.
By comparing construction costs against the new property tax revenues generated by the renovated homes, the researchers calculated a public payback period of 8.32 years. When factoring in the municipal savings from eliminated blight maintenance alongside the extra property taxes collected from appreciating neighbor homes, that payback schedule shortened to 5.76 years. Over that time frame, the total tax revenue generated per project exceeded initial outlays by a ratio of 2.42 to 1.
These financial returns occurred almost entirely in environmentally vulnerable locations. Using federal data from the Climate and Economic Justice Screening Tool, the researchers found that over 95 percent of the infill parcels and 90 percent of nearby homes were located in census tracts facing severe climate burdens, primarily flood risks, industrial pollution, and high household energy costs. Private capital often avoids these neighborhoods due to perceived operational risk. The authors interpret their findings as evidence that public infill programs can stimulate private co-investment and financial recovery in flood-prone, disinvested urban corridors without relying on massive, disruptive urban renewal projects.
The authors note several limitations to keep in mind when interpreting these findings. The study relied on yearly county tax appraisals rather than market sale transactions because sales in distressed neighborhoods can be infrequent. The researchers also note that Savannah paired its construction program with home purchase assistance, which helped long-term residents purchase these homes. The authors say this assistance, based on strict income qualification criteria, mitigated some concerns about gentrification pressure in historic neighborhoods.
