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Evidence of the Dual Nature of Property Value Recovery Following Environmental Remediation


  • Recai Aydin
  • Barton A. Smith


The literature on home value diminution attributable to environmental degradation and its possible reversal typically ignores indirect effects upon neighborhood characteristics that can exacerbate the overall change in property values, resulting in underestimates of diminution and overestimates of recovery. Furthermore, to the extent that direct price effects and neighborhood transition effects respond differently to remediation efforts, the relatively new postremediation literature misses an important part of the recovery process. This study examines both direct and indirect effects and finds in the case of Houston Environmental Protection Agency Superfund sites that, while the direct value impacts of proximity to toxic waste sites was significantly reduced after remediation, the indirect effects associated with induced demographic changes were much slower to reverse, producing a housing market inertia that stifled full home value recovery. Copyright 2008 American Real Estate and Urban Economics Association

Suggested Citation

  • Recai Aydin & Barton A. Smith, 2008. "Evidence of the Dual Nature of Property Value Recovery Following Environmental Remediation," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 36(4), pages 777-812, December.
  • Handle: RePEc:bla:reesec:v:36:y:2008:i:4:p:777-812

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    References listed on IDEAS

    1. Mankiw, N. Gregory & Weil, David N., 1989. "The baby boom, the baby bust, and the housing market," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 235-258, May.
    2. Karl E. Case & Robert J. Shiller, 1988. "The behavior of home buyers in boom and post-boom markets," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 29-46.
    3. Case, Karl E & Shiller, Robert J, 1989. "The Efficiency of the Market for Single-Family Homes," American Economic Review, American Economic Association, vol. 79(1), pages 125-137, March.
    4. Cutler, David M & Poterba, James M & Summers, Lawrence H, 1990. "Speculative Dynamics and the Role of Feedback Traders," American Economic Review, American Economic Association, vol. 80(2), pages 63-68, May.
    5. Fama, Eugene F. & French, Kenneth R., 1988. "Dividend yields and expected stock returns," Journal of Financial Economics, Elsevier, vol. 22(1), pages 3-25, October.
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