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Urban Casinos and Local Housing Markets: Evidence from the US

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  • Huang, Haifang

    ()
    (University of Alberta, Department of Economics)

  • Humphreys, Brad

    ()
    (West Virginia University)

  • Zhou, Li

    ()
    (University of Alberta, Department of Economics)

Abstract

We examine the housing-market impact of U.S. urban casinos in nearby neighborhoods using data on home-purchase mortgage applications around opening years. Our sample covers 48 new urban casinos opened between 1995 and 2009. We compare changes in the volume of mortgage applications, the average loan amount and the average income of applicants in census tracts near new casinos to those farther away in the same metropolitan areas. We find that casino openings had little impact on the number of applications or applicants’ economic profile, but they were associated with declines in the growth of the average loan amount, which we use as a proxy for house prices. The negative effect persists even after we control for possible anticipation effects through which casino openings affect house prices before the openings, and urban casinos’ tendency to locate near poor neighborhoods that were disproportionately affected by the subprime mortgage expansion and collapse in the U.S. The estimated loss is 6-7 percentage points from trend over 3 years. We interpret the findings as evidence of casinos' negative impacts on residential amenities.

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Bibliographic Info

Paper provided by University of Alberta, Department of Economics in its series Working Papers with number 2014-4.

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Length: 36 pages
Date of creation: 24 Jun 2014
Date of revision:
Handle: RePEc:ris:albaec:2014_004

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Keywords: Casino; Economic Impact; Amenities;

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  1. Robert B. Avery & Kenneth P. Brevoort & Glenn B. Canner, 2007. "Opportunities and Issues in Using HMDA Data," Journal of Real Estate Research, American Real Estate Society, American Real Estate Society, vol. 29(4), pages 351-380.
  2. William N. Evans & Julie H. Topoleski, 2002. "The Social and Economic Impact of Native American Casinos," NBER Working Papers 9198, National Bureau of Economic Research, Inc.
  3. Earl L. Grinols & David B. Mustard, 2006. "Casinos, Crime, and Community Costs," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 28-45, February.
  4. Alicia H. Munnell, 1992. "Mortgage lending in Boston: interpreting HMDA data," Working Papers, Federal Reserve Bank of Boston 92-7, Federal Reserve Bank of Boston.
  5. Huang, Haifang & Humphreys, Brad & Zhou, Li, 2014. "Do Urban Casinos Affect Nearby Neighborhoods? Evidence from Canada," Working Papers 2014-2, University of Alberta, Department of Economics, revised 01 Mar 2014.
  6. Jonathan Wiley & Douglas Walker, 2011. "Casino Revenues and Retail Property Values: The Detroit Case," The Journal of Real Estate Finance and Economics, Springer, Springer, vol. 42(1), pages 99-114, January.
  7. Michael Wenz, 2007. "The Impact of Casino Gambling on Housing Markets: A Hedonic Approach," Journal of Gambling Business and Economics, University of Buckingham Press, University of Buckingham Press, vol. 1(2), pages 101-120, June.
  8. Goodman, Allen C. & Smith, Brent C., 2010. "Residential mortgage default: Theory works and so does policy," Journal of Housing Economics, Elsevier, Elsevier, vol. 19(4), pages 280-294, December.
  9. Atif Mian & Amir Sufi, 2009. "The Consequences of Mortgage Credit Expansion: Evidence from the U.S. Mortgage Default Crisis," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 124(4), pages 1449-1496, November.
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