Impact of Transportation and Other Jurisdictional-Level Infrastructure and Services on Housing Prices

Abstract

The existing literature, while estimating the impact of infrastructure and services, has tended to treat the housing market as homogeneous. This paper adds to the extant literature by systematically estimating the impact of selected jurisdictional-level public infrastructure and services—transportation accessibility (morning travel time to central business district; automobile accessibility to retail jobs), crime (violent crime rate), school quality (school expenditure per pupil), and overall quality of municipal-level infrastructure and services (overall municipal expenditure per person)—on various single-family housing submarkets. The single-family housing market is subdivided into four submarkets—existing high-quality housing; existing low-quality housing; new high-quality housing; and new low-quality housing. The data used in this paper include all the single-family housing sales recorded by the county tax assessor’s office for 29 cities and towns of King County, Wash. from the years 1991 to 2000. The results show that the impact of the infrastructure and services depends upon the quality and age of the house. The findings suggest that the decrease in travel time to the central business district is likely to primarily benefit high-quality housing, while a decrease in violent crime rate is likely to equally benefit high- and low-quality housing. The increase in accessibility to retail jobs is valued by the residents of low-quality houses, while it may be considered a nuisance by the residents of high-quality houses. The findings on school quality suggest that the residents of high-quality houses are likely to value school quality more than the residents of low-quality houses. The per-person municipal expenditure is likely to benefit new housing two times as much as it would benefit existing housing.