Spatial Hedonic Models of Airport Noise, Proximity, and Housing Prices

Abstract

Despite the refrain that housing prices are determined by location, location, and location, few studies of airport noise and housing prices have incorporated spatial econometric techniques. We compare various spatial econometric models and estimation methods in a hedonic price framework to examine the impact of noise on 2003 housing prices near the Atlanta airport. Spatial effects are best captured by a model including both spatial autocorrelation and autoregressive parameters estimated by a generalized moments approach. In our preferred model, houses located in an area in which noise disrupts normal activities (defined by a daynight sound level of 7075 decibels) sell for 20.8 percent less than houses located where noise does not disrupt normal activities (defined by a daynight sound level below 65 decibels). The inclusion of spatial effects magnifies the negative price impacts of airport noise. Finally, after controlling for noise, houses farther from the airport sell for less; the price elasticity with respect to distance is 0.15, implying that airport proximity is an amenity.