Context of Study
The unique character of a city is always found in its history, but all too often our historic landmarks are threatened by uncontrolled development. The Historic Macon Foundation seeks to preserve our city's history proactively, by rehabilitating and rebuilding historically significant homes. In the process they have also found a unique strategy for improving the social connectivity of their target neighborhoods. By engaging local residents in rediscovering and protecting their own community's history, Historic Macon protects the memories that make up the city's collective identity. In the process of preserving Macon's architecture and landmarks, they are bringing people together to ensure the future is just as vibrant as the past.
LandLink partnered with Historic Macon to analyze the economic impacts of their property rehabilitation program in Beall's Hill, a historic neighborhood connecting the downtown business district with Mercer University. Our goal was to determine what effect the housing investments were having on property values in the area, both to measure the economic benefits of development and test whether values were accelerating at a pace that could prompt gentrification. Historic Macon has acquired and rehabilitated 38 properties in Beall's Hill since 2008, investing or leveraging a combined $5.9 million. We also sought to create a comprehensive demographic portrait of Beall's Hill, particularly for socioeconomic factors such as median income and rental rates, to help Historic Macon better understand the context of their neighborhood.
We utilized two primary data sets in our analysis of Beall's Hill: property transaction information from the city's tax assessor and socioeconomic data from the American Community Survey.
Geographic representations of property parcels in the area surrounding Beall's Hill can be seen in the accompanying maps, which we used to identify the city's neighborhoods, tax classification, and annual assessed values. The change in property values as a result of Historic Macon's investments was assessed using a difference-in-difference regression model, which measured the effect on the rehabilitated properties themselves and those in the surrounding area. The impact of Historic Macon's investments was separated from overall market trends through control variables for annual appreciation, parcel acreage, classification (commercial, residential, etc.), and neighborhood. These impacts were then aggregated by year to determine the overall annual effect of Historic Macon's rehabilitation efforts.
The American Community Survey data was accessed from the US Census Factfinder. Using the 5-year rolling average from 2014, the latest year of available information, we approximated the neighborhood of Beall's Hill from Census Block Group 137.00-3. The census block group designation and accompanying data variables can be found below.
The impact of Historic Macon's property investment program was consistently positive and statistically significant. Our analyses found that in those properties which had been acquired by Historic Macon, the assessed property values increased by an average of $43,000 in the first year after reconstruction and $23,000 in the second year. Considering the median property value for the area was an approximate $44,717 in 2014, and the average expected value of properties prior to acquisition was $26,250, that represents a 251% average increase in value over two years. After the initial two years of appreciation, however, Historic Macon's properties stabilize at their increased value, indicating that further speculation is not driving up property values. The spillover effect of Historic Macon's investments on surrounding properties is also positive, averaging at $0.40 of increased value each year per meter properties are closer to rehabilitated houses. This may not seem like much initially, but compounded over the 38 properties Historic Macon has acquired in Beall's Hill and the hundreds of meters of distance from each property to each parcel in the neighborhood the spillover effect quickly becomes significant.
The results of the American Community Survey socioeconomic variables are given in the table below. Beall's Hill has a population of approximately 673 people living in 174 households, with a median household income of $13,561. Only 111 people are estimated to be in the labor force, however, contributing to the staggeringly high poverty rate of 58.25%. The majority of households are non-family, indicating that there are a large number of single occupants, most likely retirees, as indicated by the small percentage of population below the age of 16. There are 223 housing units within the area, of which 174 are occupied and 49 are vacant. Of the occupied houses, only 41 are owner-occupied, leaving 133 rental units. This is significant for property development since it means residents are more sensitive to property value increases, as they may lead to rental rate spikes.
Our study with the Historic Macon Foundation had two primary questions: what effect has the housing rehabilitation program had on the local economy and how sustainable is the current pace of property investments? The overall increase in property values in the areas surrounding Historic Macon's target blocks demonstrates that their work has been beneficial for the growth of the property market. As measured against the overall market, however, the scale of this impact was gradual, and even those properties receiving direct investment stabilized to meet the average value change in the area after two years, indicating that Historic Macon has not contributed to significant speculative investment or neighborhood gentrification. This supports Historic Macon's strategy of encouraging gradual changes in property values to stabilize the neighborhood without tipping it into uncontrolled development. Given the high rate of poverty and proportion of residents living in rental units, this gradual strategy is an effective deterrent to the negative externalities of development.
Historic Macon's slower pace of acquisitions has allowed residents to adjust to new homeowners, preventing the sense of “invasion by outsiders” that could create social divides in the area. Historic Macon’s commitment to social integration within the community has contributed to the neighborhood’s cohesion; by hosting local socials, creating community spaces, encouraging cycling and walking, and maintaining a personal connection to the neighborhood, Historic Macon has maintained their mission of preserving the cultural character of Beall’s Hill while simultaneously reducing the number of blighted and vacant properties. The conclusion of this is to encourage continuation of Historic Macon's selective, gradual strategy of development, and to suggest further expansion into the southwestern quadrant of Beall’s Hill, which still suffers from systemic undervaluation of their properties.