Is Wal-Mart a Bad Neighbor? Repeat Sales Evidence on How Residential Property Values React to a New Big-Box Store

Colorado College Working Paper No. 2010-08

25 Pages Posted: 11 Sep 2010  

Daniel K. N. Johnson

Colorado College - Department of Economics and Business

Kristina M. Lybecker

Colorado College - Department of Economics & Business

Date Written: September 9, 2010

Abstract

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.

Keywords: externality, location, real estate, residential, retail, WalMart

JEL Classification: N9, R1

Suggested Citation

Johnson, Daniel K. N. and Lybecker, Kristina M., Is Wal-Mart a Bad Neighbor? Repeat Sales Evidence on How Residential Property Values React to a New Big-Box Store (September 9, 2010). Colorado College Working Paper No. 2010-08. Available at SSRN: https://ssrn.com/abstract=1674598 or http://dx.doi.org/10.2139/ssrn.1674598

Daniel Kent Neil Johnson (Contact Author)

Colorado College - Department of Economics and Business ( email )

14 E Cache La Poudre Street
Colorado Springs, CO 80903
United States
719-389-6654 (Phone)
719-389-6927 (Fax)

HOME PAGE: http://faculty1.coloradocollege.edu/~djohnson

Kristina M. Lybecker

Colorado College - Department of Economics & Business ( email )

14 E Cache La Poudre Street
Colorado Springs, CO 80903
United States
719-389-6445 (Phone)
719-389-6927 (Fax)

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