Publisher:
RWI - Leibniz-Institut für Wirtschaftsforschung, Essen, Germany
How does a new highway in Germany impact residential real estate prices – both owner-occupied and rental properties? Construction of the A38 highway was completed in 2009 and expanded by additional interchanges at several points in time, through...
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ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
Signature:
DS 10
Inter-library loan:
No inter-library loan
How does a new highway in Germany impact residential real estate prices – both owner-occupied and rental properties? Construction of the A38 highway was completed in 2009 and expanded by additional interchanges at several points in time, through 2013. The highway connects the east and west of Germany. This dramatically alleviated congestion on nearby roads as well as enhanced connectivity for residents in the mainly rural areas. We consider a hedonic house price model with a quasi-difference-in-differences specification, to test the hypothesis that there are positive price effects on German real estate resulting from the highway completion and the associated relief of nearby road congestion. We control for potential negative effects due to additional noise and pollution, using direct distance (as the crow flies) to the nearest point on the highway. We use a German dataset on rental and owner-occupied real estate prices, for properties listed for sale and rent throughout Germany in the years 2007-2017. The treatment effects for houses and for apartments for rent are positive and significant, which implies that shorter distance to the highway leads to higher prices after the opening of the major highway (A38). The magnitudes of these treatment effects are larger for houses than for apartments. These results imply that the market capitalizes the new highway more strongly for sale properties than for rentals, perhaps because ownership implies a longer term commitment to staying in a property than renting. In other words, the present discounted value of the expected highway benefits over a relatively long time horizon are reflected quite strongly in owner occupied properties. For the changes in 2008 and 2009 we do not observe any significant effects of noise and pollution on prices while there are negative effects in 2012 and 2013. It appears likely that these disamenities became more prevalent in the most recent years.
Publisher:
Research Department, Federal Reserve Bank of Philadelphia, Philadelphia, PA
Freeway revolts were widespread protests across the U.S. following early urban Interstate construction in the mid-1950s. We present theory and evidence from panel data on neighborhoods and travel behavior to show that diminished quality of life from...
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ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
Signature:
VS 438
Inter-library loan:
No inter-library loan
Freeway revolts were widespread protests across the U.S. following early urban Interstate construction in the mid-1950s. We present theory and evidence from panel data on neighborhoods and travel behavior to show that diminished quality of life from freeway disamenities inspired the revolts, affected the allocation of freeways within cities, and changed city structure. First, actual freeway construction diverged from initial plans in the wake of the growing freeway revolts and subsequent policy responses, especially in central neighborhoods. Second, freeways caused lower growth in population, income, and land values in central areas, but faster growth in outlying areas. These patterns suggest that in central areas, freeway disamenity effects exceeded small access benefits. Third, in a quantitative general equilibrium spatial model, the aggregate benefits from burying or capping freeways are large and concentrated downtown. This result suggests that targeted mitigation policies could improve welfare and helps explain why opposition to freeways is often observed in central neighborhoods. Disamenities from freeways, versus their commuting benefits, likely played a significant role in the decentralization of U.S. cities
