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Urban Casinos and Local Housing Markets: Evidence from the US

Author

Listed:
  • 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.

Suggested Citation

  • Huang, Haifang & Humphreys, Brad & Zhou, Li, 2014. "Urban Casinos and Local Housing Markets: Evidence from the US," Working Papers 2014-4, University of Alberta, Department of Economics.
    • Handle: RePEc:ris:albaec:2014_004
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    File URL: https://sites.ualberta.ca/~econwps/2014/wp2014-04.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Casino; Economic Impact; Amenities;
    All these keywords.

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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