Neighborhood Intel: Predicted Demolition and Predicted Impact

Munetrix Economic Model Background and Methodology

Munetrix economic model estimates the impact rehab and demolition have on the value of homes
nearby. Our economic model provided the scientific evidence used to release more than $2.2 billion in
federal dollars for blighted property demolition across the country. Munetrix economic impact model
works by analyzing how the sale price of homes are impacted by nearby property changes such as
demolition and rehabilitation (property interventions). We run this model in any community we have
subscribed to our Parcel Analyzer system where we have property-level data. The analysis we perform
includes more than one hundred thousand property sales across more than a decade impacted by tens
of thousands of demolitions and rehabilitations.


To identify how demolition and rehabilitation impact different types of neighborhoods, we split all
Neighborhoods in the Country into ten unique types. We did this by using a statistical process that
groups alike neighborhood types based on various economic, socioeconomic and demographic factors
from the Census Bureau. We then analyzed how the impacts of demolitions and rehabs uniquely impact
nearby property values in each of then 10 neighborhood types in cities where we have property data
through Parcel Analyzer.


The predicted demolition and rehab impacts you see in Neighborhood Intel are based on our deep
understanding of how property values can change in each neighborhood type. We are able to estimate
impacts based on the density of homes and home value, and the estimated % impact a nearby
demolition in each neighborhood type. Value impacts are calculated by creating a counterfactual
simulation where all properties that were demolished or rehabbed are instead left vacant, abandoned
and tax foreclosed.

 

Notes on the impact calculation process:

  • Our model estimates the value of a home by breaking down the sale price of an actually sold
    home using various factors including:
    • Physical attributes (i.e. sq. ft., bedrooms, bathrooms, age, siding type).
    • Neighborhood type.
    • Adjustment and control for macro housing market trends.
    • Nearby property statuses (i.e. tax, occupancy, foreclosure)
  • Demolitions are the result of taking an occupied tax foreclosed structure and making it a vacant lot.
  • Rehabs are the result of taking an occupied tax foreclosed structure and making it an occupied and tax current structure.
  • Properties impacted by a property intervention fall within 500 ft as measured from property edge to property edge.
  • If multiple demolitions or rehabs happened nearby to a property, prior interventions are taken into account to not overestimate intervention impact.
    • For example, if a demolition is estimated to have a 5% impact on a nearby property and that property has a current assessed value of $100,000, then the estimated impact of the most recent demolition is $5,000 (100,000*.05). The impact of a demolition on the same property that occurred before the most recent demolition would be based on an adjusted assessed property value. $100,000 - $5,000 = $95,000 adjusted assessed property value. So the impact of the prior demolition on that property would be $4,750 ($95,000*.05).