Study: Wal-Marts raise home values
New research contradicts what many people believe -- that a new Wal-Mart store in the neighborhood hurts the value of homes.
A new report from the National Bureau of Economic Research declares the opposite of what many people believe to be true: Having a new Wal-Mart nearby actually raises home property values.
Stunned? When people protest the construction of a Wal-Mart in their neighborhood, falling property values are often part of the argument.
"Some residents who oppose a new store have expressed concerns about increased traffic, noise and sound pollution, property devaluation, and threats to small-business owners," The Boston Globe wrote about a recent protest against a planned Wal-Mart store in Watertown, Mass.
In this study we use over one million housing transactions located near 159 Walmarts that opened between 2000 and 2006 to test if the opening of a Walmart does indeed lower housing prices. Using a difference-in-differences specification, our estimates suggest that a new Walmart store actually increases housing prices by between 2 and 3 percent for houses located within 0.5 miles of the store and by 1 to 2 percent for houses located between 0.5 and 1 mile.
The study says that on average, that's a $7,000 increase for the homes within a half-mile and $4,000 for those farther out. (Post continues below.)
Business Insider explains, "The researchers found that the Wal-Mart acted as a community hub and people will pay for the convenience of having one nearby."
The researchers also said the results indicate that the benefits of having a handy Wal-Mart and the other stores it attracts outweigh negatives, such as increased traffic and crime.
But, wait, you say. Weren't housing prices shooting up in that time period anyway?
Yes, but the two economists accounted for that and were able to isolate the impact of a new Wal-Mart. Devin Pope, an assistant professor at the University of Chicago's Booth School of Business, added in an email when we asked him about that:
Another concern that your readers might have is that Walmart may enter into areas where housing prices are already increasing at a faster rate than other areas. Our analysis also takes care of this concern by controlling for differences in house price trends that occur before the announcement and building of a Walmart. We show a very strong trend break in housing prices that occurs right around the announcement and building of a Walmart, which suggest that there is a causal effect of Walmart on housing values.
Is this the end of the debate? Likely not. Another study (.pdf file), by John Loyer of The College of New Jersey, reached a different conclusion:
Our results indicate that Wal-Mart store openings do not have an effect on the growth in the tax base in host or adjacent municipalities in either the first year or subsequent years. We also find no evidence that Wal-Mart has an effect on residential or commercial property values.
And, of course, what happens in one location may not be duplicated in another. When it comes to the pros and cons of Wal-Mart in town, the verdict is still out. As CNNMoney points out:
Some studies show for example, that Wal-Mart's low prices often raise the household wealth of poor, and particularly, minority families considerably. Other studies show that new Wal-Mart stores lower average wages and reduce the number of retail jobs in an area.
What's your take? Would the convenience of having a new Wal-Mart nearby outweigh the negatives? Did your property values go up after a Wal-Mart opened near your home?
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I believe THAT IT IS WAY TO HIGH TO FAST!!!! The study does not tell or justify even with WAL-mart in the area WHY THE CITY INCREASED SO HIGH THE TAXES ??????
I am APPEALING because of lack of SURVEY DOCUMENTATION for the HOMEOWNERS to see.
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