When Walmart comes to town, home prices go ... up?May 30, 2012: 1:16 PM ET
When Walmart comes to town, opponents often fret that the big box store could lower local wages, put smaller competitors out of business and depress home values.
But new research suggests new Walmart stores may actually drive nearby home prices higher.
In their research, economists Devin Pope at the University of Chicago and Jaren Pope at Brigham Young University studied more than 600,000 housing transactions near 159 new Walmart stores. Homes located within a half mile of a new store saw their prices rise between 2% to 3%, or an average of $7,000, in the two and a half years after a new Walmart store was built.
Homes that were between a half mile and one mile away, saw an increase of 1% to 2%, or roughly $4,000. Any farther away and the increases were statistically insignificant, the report said.
The study looks at the years between 2001 and 2006, a time when most home prices were still rising. But regardless of the nationwide trend, the research revealed a positive correlation between Walmarts and home prices, relative to areas not located close to a Walmart.
"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 authors said. "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."
Of course, the report has several caveats. The study found that Walmarts increase home values on average, but it is possible that in specific cases, a new store may do just the opposite. The report also didn't include rural areas where housing data was unavailable.
Over the years, Walmart has become a hot topic for economic research, and it seems for every positive finding about the retail giant, there's a negative study to counteract it.
Some studies show for example, that Walmart's low prices often raise the household wealth of poor, and particularly, minority families considerably. Other studies show that new Walmart stores lower average wages and reduce the number of retail jobs in an area.