Is Wal-Mart a Bad Neighbor? Repeat Sales Evidence on How Residential Property Values React to a New Big-Box Store
Daniel K. N. Johnson
Colorado College - Department of Economics and Business
Kristina M. Lybecker
Colorado College - Department of Economics & Business
September 9, 2010
Colorado College Working Paper No. 2010-08
While there is anecdotal evidence that home values decline when a big-box store (such as Wal-Mart) decides to locate in the area, there is a paucity of evidence on that effect. This paper uses a repeat sales model to compare residential property values, and the speed of sale of the property, to compare the impact that an arrival has. Results conclude that there is a ‘news effect’ surrounding the arrival, and that the total effect is small at most. For most specifications tested, the number of stores nearby, the arrival of new stores, and the distance to the nearest store all have insignificant impacts on both property resale value and the number of days that a property spends on the market prior to sale. In the worst-case scenario, the arrival of a Wal-Mart is associated with a decline equivalent to roughly one percent of the home’s square footage and is not absorbed by those closest to the new retailer but by rather more distant neighbors.
Number of Pages in PDF File: 25
Keywords: externality, location, real estate, residential, retail, WalMart
JEL Classification: N9, R1working papers series
Date posted: September 11, 2010
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