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New Highways, House Prices, and Urban Development: A Case Study of Toll Roads in Orange County, CA


  • Boarnet, Marlon G
  • Chalermpong, Saksith


We examine the link between highways and urban development by employing both hedonic analysis and multiple sales techniques to study the impact of the construction of toll roads in Orange County, California, on house prices. Urban economic theory predicts that if highways improve accessibility, that accessibility premium will be reflected in higher land prices. Our empirical analysis of house sales prices provide strong evidence that the toll roads, the Foothill Transportation Corridor Backbone in particular, created an accessibility premium; home buyers are willing to pay for the increased access that the new roads provide. Such willingness to pay influences both development patterns and, potentially, induced travel (the association between increases in highway capacity and increases in vehicles miles of travel). The results are consistent with the idea that induced travel is caused, in part, by changes in urban development patterns that are linked to increases in highway capacity .

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  • Boarnet, Marlon G & Chalermpong, Saksith, 2003. "New Highways, House Prices, and Urban Development: A Case Study of Toll Roads in Orange County, CA," University of California Transportation Center, Working Papers qt2zd554cs, University of California Transportation Center.
  • Handle: RePEc:cdl:uctcwp:qt2zd554cs

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    References listed on IDEAS

    1. James P. Johnson & M. Audrey Korsgaard & Harry J. Sapienza, 2002. "Abstract," Strategic Management Journal, Wiley Blackwell, vol. 23(12), pages 1141-1160, December.
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    Cited by:

    1. Stephen Conroy & Jennifer Milosch, 2011. "An Estimation of the Coastal Premium for Residential Housing Prices in San Diego County," The Journal of Real Estate Finance and Economics, Springer, vol. 42(2), pages 211-228, February.
    2. Claudio A. Agostini & Gastón Palmucci, 2008. "Capitalización Heterogénea de un Bien Semipúblico: El Metro de Santiago," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 45(131), pages 105-128.
    3. Rhoads, Thomas A. & Shogren, Jason F., 2006. "Why do cities use supply side strategies to mitigate traffic congestion externalities?," Economics Letters, Elsevier, vol. 92(2), pages 214-219, August.
    4. Steven Carter, 2008. "Court-ordered Busing and Housing Prices: The Case of Pasadena and San Marino," Journal of Real Estate Research, American Real Estate Society, vol. 30(3), pages 377-394.
    5. Jean-Daniel Saphores & Ismael Aguilar-Benitez, 2005. "Smelly local polluters and residential property values: A hedonic analysis of four Orange County (California) cities," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 20(2), pages 197-218.
    6. Ghislaine Deymier, 2002. "Le nouveau périphérique Nord de Lyon : comment analyser les effets anticipés sur l'évolution du marché foncier et immobilier de l'agglomération lyonnaise ?," Post-Print halshs-00106258, HAL.
    7. Kang, Chang Deok & Cervero, Robert, 2008. "From Elevated Freeway to Linear Park: Land Price Impacts of Seoul, Korea's CGC Project," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt81r021w2, Institute of Transportation Studies, UC Berkeley.
    8. Lindsey, Marshall & Schofer, Joseph L. & Durango-Cohen, Pablo & Gray, Kimberly A., 2010. "Relationship between proximity to transit and ridership for journey-to-work trips in Chicago," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(9), pages 697-709, November.
    9. Cervero, Robert & Kang, Chang Deok, 2011. "Bus rapid transit impacts on land uses and land values in Seoul, Korea," Transport Policy, Elsevier, vol. 18(1), pages 102-116, January.
    10. Claudia N. Berg & Uwe Deichmann & Yishen Liu & Harris Selod, 2017. "Transport Policies and Development," Journal of Development Studies, Taylor & Francis Journals, vol. 53(4), pages 465-480, April.
    11. Funderburg, Richard G. & Nixon, Hilary & Boarnet, Marlon G. & Ferguson, Gavin, 2010. "New highways and land use change: Results from a quasi-experimental research design," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(2), pages 76-98, February.
    12. Davis, Coray & Jha, Manoj K., 2011. "A dynamic modeling approach to investigate impacts to protected and low-income populations in highway planning," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(7), pages 598-610, August.
    13. Ghislaine Deymier, 2003. "Capitalisation immobilière des gains d'accessibilité : état de l'art et étude de cas sur l'agglomération lyonnaise," Post-Print halshs-00100326, HAL.
    14. Cervero, Robert & Kang, Chang Deok, 2009. "Bus Rapid Transit Impacts on Land Uses and Land Values in Seoul, Korea," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt4px4n55x, Institute of Transportation Studies, UC Berkeley.


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