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The Effect of Noise Barriers on the Market Value of Adjacent Residential Properties

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  • Benoit Julien
  • Paul Lanoie

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    Abstract

    This paper provides the first study on the impact of noise barriers on the price of adjacent houses based on a repeat sale analysis (RSA), arguably the best methodology to address this question. Essentially, a repeat sale analysis examines the differential between the prices of houses sold before and after an event that may have affected their value. If there is a significant change of price between the two transactions, it may be attributed to the event. Of course, for that to be true, the researcher must have controlled for other changes that may have had an effect on the house price between two sales, like the evolution of the real estate market and major renovations done to the house. We collected our data in a neighbourhood of Laval, a suburb of Montreal, where an important noise barrier has been built in 1990 along a highway. We were able to obtain information on 134 houses that have been sold at least twice during the period 1980 - 2000. In addition, we were able to get data on the real estate market in the area during the whole period, as in most RSA, but also on the demographic composition of the area and on major renovations that were done in these houses throughout the time span. To our knowledge, this is the first time that information on major renovations was available for a RSA. We conclude that the noise barrier has induced an increase of 10 %, on average, of the price of adjacent houses in our sample. Ce texte présente la première étude sur l'impact des murs antibruit sur le prix des maisons adjacentes basée sur une analyse des ventes répétées, qui constitue la meilleure méthodologie pour étudier cette question. Essentiellement, une analyse des ventes répétées nous permet d'examiner la différence de prix de vente pour une maison donnée avant et après un événement qui aurait pu en affecter le prix. S'il y a une différence de prix « significative » entre les deux transactions, on peut alors attribuer cette différence à l'événement. Bien sûr, pour que cela soit vrai, il faut s'assurer de tenir compte des autres éléments qui auraient pu affecter le prix de la maison entre les deux ventes, comme l'évolution générale du marché immobilier ou les rénovations majeures qui auraient pu être faites. Notre étude se base sur un quartier de la ville de Laval, une banlieue de Montréal, où un grand mur antibruit a été construit en 1990 le long d'une autoroute. Nous avons pu obtenir des informations sur 134 maisons qui ont été vendues au moins deux fois pendant la période 1980 - 2000. En plus, nous avons pu avoir des informations sur l'ensemble du marché immobilier, comme dans toutes les autres analyses de ventes répétées, mais aussi sur les caractéristiques sociodémographiques du secteur et sur les rénovations majeures qui ont touché ces maisons durant la période. À notre connaissance, c'est la première fois que des informations sur les rénovations sont disponibles dans une analyse des ventes répétées. Nous concluons que le mur antibruit a entraîné une augmentation de 10 %, en moyenne, du prix des maisons dans notre échantillon.

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    Bibliographic Info

    Paper provided by CIRANO in its series CIRANO Working Papers with number 2002s-81.

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    Date of creation: 01 Sep 2002
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    Handle: RePEc:cir:cirwor:2002s-81

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    Keywords: noise barriers; housing market; repeat sale analysis; Contributions volontaires ; pertes publiques; risque; ambiguïté; données expérimentales;

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    References

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    1. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
    2. Kohlhase, Janet E., 1991. "The impact of toxic waste sites on housing values," Journal of Urban Economics, Elsevier, vol. 30(1), pages 1-26, July.
    3. Michael Baker & Nicole M. Fortin, 1999. "Women's Wages in Women's Work: A US/Canada Comparison of the Roles of Unions and Public Goods Sector Jobs," CIRANO Working Papers 99s-02, CIRANO.
    4. Palmquist, Raymond B., 1982. "Measuring environmental effects on property values without hedonic regressions," Journal of Urban Economics, Elsevier, vol. 11(3), pages 333-347, May.
    5. Dombrow, Jonathan & Knight, J R & Sirmans, C F, 1997. "Aggregation Bias in Repeat-Sales Indices," The Journal of Real Estate Finance and Economics, Springer, vol. 14(1-2), pages 75-88, Jan.-Marc.
    6. Gatzlaff, Dean H & Haurin, Donald R, 1997. "Sample Selection Bias and Repeat-Sales Index Estimates," The Journal of Real Estate Finance and Economics, Springer, vol. 14(1-2), pages 33-50, Jan.-Marc.
    7. Mayo, Stephen K., 1981. "Theory and estimation in the economics of housing demand," Journal of Urban Economics, Elsevier, vol. 10(1), pages 95-116, July.
    8. Mendelsohn, Robert & Hellerstein, Daniel & Huguenin, Michael & Unsworth, Robert & Brazee, Richard, 1992. "Measuring hazardous waste damages with panel models," Journal of Environmental Economics and Management, Elsevier, vol. 22(3), pages 259-271, May.
    9. Dean H. Gatzlaff & Marc T. Smith, 1993. "The Impact of the Miami Metrorail on the Value of Residences near Station Locations," Land Economics, University of Wisconsin Press, vol. 69(1), pages 54-66.
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