Wednesday, June 20, 2012

Wal-Mart: Neither Here nor There, Except When It's There

When Walmart Comes to Town: Always Low Housing Prices? Always?

Devin Pope & Jaren Pope, NBER Working Paper, May 2012

Abstract: Walmart often faces strong local opposition when trying to build a new store. Opponents often claim that Walmart lowers nearby housing prices. 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.

Not sure why you would have any expectation of change in housing prices near a Wal-Mart.  Slightly more noise, more lights at night, but much easier to go pick up a few boxes of .45 ACP and a gallon of milk.  Anyway, there's yer answer.

(nod to Kevin Lewis)


Gerardo said...

No mystery here. The market has capitalized the present discounted value of future savings into the home price.

You probably would see the same thing with ag subsidies pumping up the value of farmland.

Hasdrubal said...

One might also note that ghetto Wal Marts go in... well the ghetto. The Wal Marts that go into white picket fence neighborhoods are clean, pretty Super Centers. I would be surprised if adding cheap, 24 hour shopping to an already depressed neighborhood would decrease housing values, and in good neighborhoods, it's just another store.