Shane Jensen on the Price Effects of Greening Vacant Lots

Shane Jensen is Professor of Statistics and Data Science at The Wharton School, University of Pennsylvania, and a Penn IUR Faculty Fellow.

Shane Jensen is widely recognized for his interdisciplinary research that blends advanced statistical methodologies with real-world applications. His work spans Bayesian multi-level modeling, spatial and spatio-temporal statistics, and statistical computing, with impactful contributions in urban analytics, public health, and sports analytics. A particular focus of Jensen’s research is the use of high-resolution data to explore the association between aspects of the local built environment and the social and economic functioning of urban neighborhoods. Another strand of Jensen’s work uses advanced statistical modeling to address topical issues in medicine, molecular biology, and genetics.

In a recent publication in Real Estate Economics, “The price effects of greening vacant lots: how neighborhood attributes matter,” Jensen, together with co-authors Desen Lin and Susan Wachter, assesses the efficacy of the Pennsylvania Horticultural Society’s LandCare program in creating quality-of-life benefits as reflected in homeowners' higher willingness-to-pay for properties in Philadelphia neighborhoods that have experienced greening interventions.

This paper reduces sample selection bias through an innovative regression adjustment to account for the role of neighborhood attributes, thereby expanding on the previous literature by identifying not only the positive effects of vacant lot greening but also the characteristics of neighborhoods that benefit the most from implementing the program.

Jensen and his co-authors find that greening vacant lots helps to mitigate the negative effect of land vacancy on nearby property values. Properties within a 1,000-foot radius of a greened lot experience a 4.3% rise in value on average after the first year and a 13% cumulative increase on average after six years. Greening vacant lots shows a larger price effect in neighborhoods with a larger share of vacant land, with the peak effect at around 20%, eliminating nearly all of the negative impact of land vacancy in these neighborhoods.

Neighborhood attributes such as income matter, however, to the nature and degree of these effects. For example, the greening treatment is most effective in neighborhoods with household income 20–40% above the City's median household income. The effect of greening vacant lots also varies by the spatial intensity of greening activities, including greened lot concentration and landscape size.

Importantly, the paper demonstrates that the benefits of the LandCare program substantially outweigh the costs by a factor of more than 20. There are, on average, 18 homes with a median value of $250,000 within 1,000 feet of a typical greened lot. A 4.3% price effect results in a total benefit of $193,500, or $9,675 annualized at a 5% discount rate, compared to an annualized greening cost of $375 ($300 upkeep and 5% of the $1,500 installation cost).

The paper’s findings were highlighted in a video by the Wharton AI & Analytics Initiative.

Jensen and his co-authors are currently working on a study assessing the impact of greening on the use of nearby commercial amenities, including restaurants, grocery stores, and healthcare and childcare providers. This new research will expand the previous research from residential to commercial real estate by quantifying the impact of vacant lot greening on the trajectories of visits at nearby commercial locations.

Excerpts from “The price effects of greening vacant lots: how neighborhood attributes matter”

Vacant lot “cleaning and greening” is a simple but potentially effective strategy for mitigating negative effects of blighted land on surrounding property values. Philadelphia, long plagued by property abandonment, is a pioneer in remediation programs. In 1996, the Pennsylvania Horticulture Society (PHS) in cooperation with the New Kensington Community Development Corporation (NKCDC) initiated a plan to convert vacant lots into green spaces (MacDonald & Branas, 2019; NKCDC, 2021). PHS expanded the pilot and launched the Philadelphia LandCare (PLC) program in 2004 with ongoing public and philanthropic support. In 2021, new legislation aimed at fighting blighted properties, including unattended vacant lots, became law throughout Pennsylvania.

In our citywide results, we find a positive and significant impact of vacant land conversion on the value of nearby properties (within 1,000 feet), with a 4.3% rise in value after the first year, and 13% after 6 years (which then attenuates). The city’s average effect of 4.3% is larger than the price effect of 3.6% in Voicu and Been (2008) on New York’s community gardens and smaller than the price effect of 5.6% in the Heckert and Mennis (2012) evaluation of the earlier years of Philadelphia’s LandCare program.

Two of the major neighborhood attributes that impact the effect of vacant lot greening are median household income and vacant land share. We find that the price effect of vacant lot greening peaks at 15% in neighborhoods with moderately high income (whose household income is 20–40% above the median), with little to no estimated price effect in very low-income and very high-income areas. In addition to income, neighborhood vacant land share has a substantial impact on the effect of vacant lot greening. We see no price effect when neighborhood vacant land share is less than 3% but for neighborhoods with almost twice that vacant land share of 5.8% (which corresponds to the citywide average), the greening remediation of vacant lots has an estimated 9% effect on prices, twice the magnitude of the citywide average price effect. These findings support the conclusion that cleaning and greening of vacant lots can substantially mitigate the negative effect that vacant land has on nearby housing prices, especially in moderate-income and high vacant land share neighborhoods.

The benefits of vacant land greening appear to far exceed the associated costs, even under the lower citywide estimate of the effect of vacant lot greening on housing prices, particularly with concentrated greening of vacant lots. The measured price effect benefits are an order of magnitude larger than the costs, calculated in a back-of-the-envelope informal estimate. Using the median priced home ($250,000) multiplied by the number of homes within 1000 feet (about 18) and by the treatment effect (4.3%) results in a benefit of $193,500, or $9,675 annualized at a 5% discount rate, which can be compared to an annualized cost of $375 ($300 upkeep and 5% of $1,500 installation cost).