Friday, June 1, 2012

The 'Walmart Effect' on Home Prices?

When a Walmart comes to town, critics have long argued that the big-box discount retailer has the potential to lower nearby home values. Researchers decided to test that theory to see if there really is a “Walmart Effect” when it comes to home values. What they found: Nearby Walmart stores can actually drive up home prices. Economists Devin Pope at University of Chicago and Jaren Pope at Brigham Young University analyzed more than 600,000 real estate transactions near 159 newly opened Walmart stores between 2001 and 2006 in their study. The researchers found that home owners located within a half mile of a new Walmart store saw their home prices increase anywhere from 2 percent to 3 percent, or an average of $7,000, in two-and-a-half years after a new Walmart store opened. Home owners located a half mile to one mile away also saw a boost, with home prices rising 1 percent to 2 percent or about $4,000. "It was not until after the announcement and during the building process that we see homes close to the Walmart start to increase in value relative to homes that are slightly further away," the researchers say. "This suggests that it was the building of the Walmart itself that caused the change in housing values that we find, and that our results are not simply explained by Walmart building in areas that are experiencing housing price increases." Critics, however, are quick to note that the study doesn’t take into account the effect on home prices with a new Walmart in rural areas. Also, some previous studies have shown that Walmart’s low prices can increase the number of nearby poverty-level households. Source: “When Walmart Comes to Town, Home Prices Go ...” CNNMoney (May 30, 2012)

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