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Connected or Disturbed? Effects of Freeways on Housing Prices

Author

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  • Marcelo Alvez

    (Arizona State University)

Abstract

Transportation networks facilitate connectivity, which reduces trade costs and travel time. However, transportation infrastructure also generates dis-amenities, such as noise and air pollution. I apply a spatial difference-in-differences strategy to estimate capitalization effects of a new freeway in Phoenix, Arizona, and decompose the net effect into its accessibility and disamenity components. The new freeway reduced nearby housing prices by 12% after its announcement and by a total of 20% after it became operational. These effects diminish with distance from the freeway, and accessibility gains can mitigate the negative capitalization by more than 10 percentage points. The evidence indicates that, while new freeways improve connectivity, locally their disamenities can dominate the net capitalization effect.

Suggested Citation

  • Marcelo Alvez, 2025. "Connected or Disturbed? Effects of Freeways on Housing Prices," Working Papers 377, Red Nacional de Investigadores en Economía (RedNIE).
    • Handle: RePEc:aoz:wpaper:377
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    File URL: https://rednie.eco.unc.edu.ar/files/DT/377pdf
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    Keywords

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    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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