TITLE:
Is Wal-Mart a Bad Neighbor? Repeat Sales Evidence on How Residential Property Values React to a New Big-Box Store
AUTHORS:
Daniel K. N. Johnson, Kristina Acri née Lybecker
KEYWORDS:
Externality, Location, Real Estate, Residential, Retail
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.6 No.8,
August
2,
2018
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 little empirical evidence of that effect. This paper uses a repeat sales model to measure the impact that an arrival has by comparing residential property values, and the speed of sale of the property. Results demonstrate that there is a “news effect” surrounding the arrival, and that the total effect is small, on both property resale value and the number of days that a property spends on the market prior to sale. That impact depends on the type of store, but in the worst-case scenario, the arrival of a big box store is associated with a decline equal in size to mistiming the market by a year. Interestingly, all impacts improve with time, so that even the worst impacts are completely eliminated shortly after a store opening, and the long-run impact on property values is unambiguously positive. So Wal-Mart is quite the opposite of a bad neighbor, if the resident can be patient for the long-term effect.