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

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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.

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    File URL: http://www.hec.ca/iea/cahiers/2002/iea0207_pl.pdf
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    Bibliographic Info

    Paper provided by HEC Montréal, Institut d'économie appliquée in its series Cahiers de recherche with number 02-07.

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    Length: 25 pages
    Date of creation: Sep 2002
    Date of revision:
    Handle: RePEc:iea:carech:0207

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    Postal: Institut d'économie appliquée HEC Montréal 3000, Chemin de la Côte-Sainte-Catherine Montréal, Québec H3T 2A7
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    Postal: Institut d'économie appliquée HEC Montréal 3000, Chemin de la Côte-Sainte-Catherine Montréal, Québec H3T 2A7
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    Related research

    Keywords: noise barriers; housing market; repeat sale analysis;

    This paper has been announced in the following NEP Reports:

    References

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    1. 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.
    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. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
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