Negative Externalities and Real Asset Prices: Closing of Stapleton Airport and Effect on Nearby Housing Markets

25 Pages Posted: 22 Oct 2019

See all articles by Jeffrey Cohen

Jeffrey Cohen

University of Connecticut - School of Business

Cletus C. Coughlin

Federal Reserve Banks - Federal Reserve Bank of St. Louis

Jonas Crews

Federal Reserve Banks - Federal Reserve Bank of St. Louis

Stephen L. Ross

University of Connecticut - Department of Economics

Date Written: 2019-10-14

Abstract

The closing of a busy airport has large effects on noise and economic activity. We examine the effects of Stapleton airport's closing on nearby, Denver housing markets. We find evidence of immediate anticipatory effects on prices upon announcement of the closing, but no price changes at closing likely because it was widely anticipated. However, we find that high income and white households delayed moving into these locations until after the airport's closing. Also, developers upgraded the quality of houses being built after closing. Further, post-closing, these demographic and housing stock changes had substantial effects on housing prices.

Keywords: airport noise, housing prices, airport closing, anticipatory effects, dynamic price effects

JEL Classification: R31, R41

Suggested Citation

Cohen, Jeffrey and Coughlin, Cletus C. and Crews, Jonas and Ross, Stephen L., Negative Externalities and Real Asset Prices: Closing of Stapleton Airport and Effect on Nearby Housing Markets (2019-10-14). FRB St. Louis Working Paper No. 2019-27. Available at SSRN: https://ssrn.com/abstract=3473135 or http://dx.doi.org/10.20955/wp.2019.027

Jeffrey Cohen (Contact Author)

University of Connecticut - School of Business ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Cletus C. Coughlin

Federal Reserve Banks - Federal Reserve Bank of St. Louis

411 Locust St
Saint Louis, MO 63011
United States

Jonas Crews

Federal Reserve Banks - Federal Reserve Bank of St. Louis

411 Locust St
Saint Louis, MO 63011
United States

Stephen L. Ross

University of Connecticut - Department of Economics ( email )

365 Fairfield Way, U-1063
Storrs, CT 06269-1063
United States
860-486-3533 (Phone)
860-486-4463 (Fax)

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