RELEASE: Reducing Violent Crime Will Increase Housing Values, Save Taxpayers Millions
Washington, D.C. — Today the Center for American Progress released a first-of-its-kind analysis calculating the impact that violent crime rates have on the real estate values and fiscal stability of eight major American cities. The report presents the findings of two respected economists who previously served as economic advisors to presidential candidates Clinton and McCain. Dr. Robert Shapiro of Sonecon and Dr. Kevin Hassett of the American Enterprise Foundation isolated the financial impact of violent crime reductions on residential property values and crime-related municipal expenditures. Based on the results of this innovative investigation, the report’s authors calculate the potential savings and other benefits that property owners and city governments could secure by reducing violent crime.
“In today’s challenging economic climate, this report presents a cost-saving option available to many American municipalities: Boost the value of residential housing and secure budgetary savings by reducing the rate of violent crime,” said Donna Cooper, Senior Fellow at the Center for American Progress.
In the United States, violent crimes including murder, rape, assault, and robbery cost Americans nearly $200 billion per year, including $46 billion in direct costs for victims’ out-of-pocket medical costs, property losses, and foregone earnings, as well as the costs of the criminal justice system for these violent crimes, and the foregone income of criminals in jails and prisons. On top of those direct costs violent crime carry nearly $156 billion in annual, indirect, intangible costs, including the pain and suffering of its victims.
Entitled "The Economic Benefits of Reducing Violent Crime," the report presents the findings of a yearlong project to examine and analyze the costs of violent crimes nationwide and in a sample of eight major American cities. The analysis draws on data pinpointing the incidence and location of violent crimes over several years as recorded by the police departments of Boston, Chicago, Dallas, Houston, Jacksonville, Milwaukee, Philadelphia, and Seattle.
“People often focus on the tangible direct benefits to taxpayers and city governments of crime reduction. Our research shows that very large positive effects on property values should also be weighed when considering the costs and benefits of expanded crime prevention," said Kevin Hassett, co-author of the report and director of economic policy studies and resident scholar at the American Enterprise Institute. “Our research conclusively shows that measures aimed at reducing crime have significant economic benefits to homeowners.”
The estimated increases in the value of the housing stock for the eight cities and their immediate metropolitan areas, following a 10 percent reduction in homicides, range from $600 million in Jacksonville and the surrounding area to $800 million in the Milwaukee area, to $3.2 billion in Philadelphia and the surrounding suburbs, and $4.4 billion in the Boston area.
Based on the results of their research, the report’s authors estimate the budgetary savings that each of the eight cities could achieve if its rates of violent crime were declined by 10 percent or 25 percent.
“All told, the estimated savings for municipal budgets from a 25 percent reduction in violent crime range from $6 million per year in Seattle to $12 million per year in Boston and Milwaukee, to $42 million per year in Philadelphia and $59 million for Chicago,” said Robert Shapiro, co-author of the report; chairman of the economic advisory firm Sonecon, LLC.; and former U.S. under secretary of commerce for economic affairs.
Cooper added, “As we consider the crime reduction strategies needed to realize these savings, it’s imperative to note that 67 percent of homicides, 41 percent of robberies, and 20 percent of aggravated assaults are committed with a firearm. Successful strategies to reduce violent crime must include measures to significantly reduce access to firearms.”
National Urban League President and CEO Marc Morial discussed the importance of this research on a press call earlier today. During his tenure as mayor of New Orleans (1994-2002) Morial filed a first-of-its-kind lawsuit against a number of gun companies and industry groups to hold them financially responsible for the cost of handgun violence.
"I know firsthand the devastating toll gun violence can take on a city, its resources and its residents," Morial said. "Reducing access to illegal guns – by closing loopholes for gun shows and online purchases, and addressing limitations in criminal background checks – is an important component in any comprehensive approach to reducing violent crime."
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