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Effect of Air Quality on Housing Prices: Evidence From the Aliso Canyon Gas Leak

Author

Listed:
  • Anna Choi
  • Pureum Kim
  • Abraham Park

Abstract

Causal studies on the effect of air quality on house prices, specifically focusing on a large metropolitan area, are rare and difficult to obtain because of potential endogeneity from residential sorting. In this study, we use the Aliso Canyon gas leak as a natural experiment to examine the effect of air quality on housing prices of Los Angeles City. Using a spatial difference-in-differences model, we estimate that houses within the 5-mile radius of the gas well experienced a 3% discount in price during the leak, and an additional 4.4% discount after the well was sealed and the air quality was restored. The decrease in price lasted beyond 18 months, with houses closer to the leak suffering higher discounts. We conclude that air quality degradation has a direct and longer term negative impact on house prices.

Suggested Citation

  • Anna Choi & Pureum Kim & Abraham Park, 2022. "Effect of Air Quality on Housing Prices: Evidence From the Aliso Canyon Gas Leak," ERES 2022_71, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:2022_71
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    More about this item

    Keywords

    Air Quality; gas leak; Housing Price;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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