Has Falling Crime Driven New York City’s Real Estate Boom?

New York City experienced a dramatic decrease in crime over the past decade. This article examines whether this drop has driven the city's post-1994 real estate boom. Using data that include detailed information about properties sold in New York City-including actual transaction prices-as well as information about crime, schools, and housing investment between 1998 and 1999, the authors employ both hedonic and repeat-sales house price models to analyze the relative impact of these factors on the city's property values.

The results demonstrate that falling crime rates are responsible for roughly one-third of the total post-1994 real price appreciation of property. Education quality and subsidized housing investment were each responsible for roughly 20 percent of the increase. The authors also point out that during the earlier property value bust, crime and education played a relatively small role, while subsidized housing investment seems to have played a large role.