The Effect of Proximity to Commercial Uses on Residential Prices

Abstract

As distance from a house to retail sites decreases the price of a house should increase, ceteris paribus, because of increased shopping convenience. On the other hand, as distance decreases price should also decrease because the house is exposed to increased spillover of disamenities noise, light, traffic, etc. from the retail use. The study uses Computer Assisted Mass Appraisal data and a parcel level Geographic Information system map from King County (Seattle) Washington. An hedonic process is used to estimate the price effects of both the expected positive and negative price effects. Travel distance is a proxy for convenience and Euclidian distance is a proxy for negative spillovers. Standard hedonic housing price variables are used for control along with distance to other classes of non-residential uses and indexes of neighborhood street layout and connectivity. In traditional gridiron neighborhood, both convenience and negative spillovers have the expected effect on housing price. The net effect is a price effect curve with a net decrease in price at very short distances between houses and retail sites. But, beyond a short distance to the extent of convenient walking distance (about mile) the net effect is positive. In a non-traditional edge city type neighborhood, there is no effect, either positive or negative. This is due to the much greater distances between residential uses and retail uses in this type neighborhood that result from zoning that segregates land uses and long travel distance resulting from curvilinear street layout.