2019 Idaho Real Estate Blog

How does living near a WalMart affect your property value? Main Idaho Real Estate Insights
Despite Walmart?s ubiquity and popularity, the retailer faces local opposition when attempting to build a new store because opponents argue that the store, known for low prices, also lowers home values in the area. A study from the National Bureau of Economic Researchexplored the question of Walmart?s impact on home prices and found that the opposite appears to be true.

Boise Walmart Home ValuesFor the study, which was authored by Devin G. Pope and Jaren C. Pope, NBER assessed over one million housing transactions located near 159 Walmarts that opened between 2000 and 2006 to test the assumption that opening a Walmart lowers home prices.

The results from the analysis suggested that a new Walmart store actually increases nearby home prices. The study looked at home prices in the two and a half years before Walmart opened and the two and a half years after the opening. For homes located within 0.5 miles of the retailer, prices increased by about 2-3 percent. Houses between 0.5 and 1 mile from Walmart saw an increase of 1-2 percent.

For the average priced home in the assessed areas, the increase translates into an approximate $7,000 gain in value for homes within a half mile of a newly opened Walmart and a $4,000 increase for homes between a 0.5 and 1 mile.

The study stated the retailer likely affects housing prices mainly through two ways: accessibility and negative externalities.

When considering the impact of accessibility to businesses that provide shoppoing and employment on home prices, NBER stated that research points to a positive impact on prices when shopping centers are accessible.

The study highlighted research from others including Paul Emrath, whose findings provided evidence that having satisfactory shopping within one mile increased housing prices substantially inside metro areas.

Negative externalities from Walmart that could hurt prices include increased local crime, noise and light pollution, traffic congestion, garbage accumulation, and loss of perceived visual aesthetics, according to the study.

On average, the study suggested the benefits of being able to access goods at lower prices means more to households than an increase in crime, traffic and congestion, noise and light pollution, or other negative externalities that would affect home prices.

Even though the analysis generally found a positive impact on prices, the report still warned that it’s possible that in certain cases a new store may actually decrease housing values due to externalities.

Also, the study did not have housing data for more rural areas, so the impact in isolated areas might be different.

According to research used in the study, Walmart currently operates more than 4,400 retail facilities and employs almost 1.4 million people in the U.S.
 

 
Posted by tlangford at 7/20/2012 6:11:00 PM
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Michelle Penick, Build Idaho Client Real Estate Services

Michelle Penick

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