Walmart delivers Low Prices…and High Home Prices
When Walmart Comes to Town: Always Low Housing Prices? Always?
- Devin Pope and Jaren Pope
- A version of the paper can be found here.
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Walmart often faces strong local opposition when trying to build a new store. Opponents often claim that Walmart lowers nearby housing prices. In this study we use over one million housing transactions located near 159 Walmarts that opened between 2000 and 2006 to test if the opening of a Walmart does indeed lower housing prices. Using a difference-in-differences specification, our estimates suggest that a new Walmart store actually increases housing prices by between 2 and 3 percent for houses located within 0.5 miles of the store and by 1 to 2 percent for houses located between 0.5 and 1 mile.
Walmart is the prime example of how competition and free markets can deliver goods to consumers at prices nobody would have believed possible 20-30 years ago. I personally love Walmart, but Amazon is quickly becoming my retail store of choice (gotta love competition!).
Of course, Walmart has a lot of haters, and probably for good reason in some cases. Common criticisms include the following: They exploit labor, they destroy communities, they strong-arm suppliers, and so forth.
But how does a Wal-Mart affect real estate prices?
As shown below, prices on real estate surrounding a Walmart get a boost.
More home equity loan proceeds to spend on Walmart products!
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Definitions of common statistics used in our analysis are available here (towards the bottom)