The study, released in May, is titled "When Walmart Comes to Town: Always Low Housing Prices? Always?" It was conducted by Devin G. Pope of the Booth School of Business at the University of Chicago and Jaren C. Pope of the Department of Economics at Brigham Young University.
According to the introduction to the 35-page study, it was conducted to test the claim of many that the existence of a Walmart lowers nearby housing prices. This topic is relevant to residents of Menifee, where a Walmart is planned for the corner of Scott Road and Haun Road sometime late next year.
The study looked at more than 1 million housing transactions located near 159 Walmarts that opened between 2000 and 2006 to see if housing prices dropped as a result. The findings indicate that a new Walmart actually increases housing prices from 2-3 percent for houses within a half-mile of the store and 1-2 percent for houses within a half-mile to a mile from the store.
The study does acknowledge, however, that external factors in the surrounding community can result in varying impacts on local housing prices. Quoting the study:
"The Walmart store often acts as a hub that attracts a variety of other businesses, which in turn can also have impacts on housing markets. If households value convenient access to the goods and services that Walmart and these other businesses provide, then the new stores would have a positive impact on housing prices. However, if Walmart and the businesses that cluster) nearby also impose negative externalities such as increased pollution, crime, and traffic, then this could adversely impact prices of nearby houses."
Stefan West, a local real estate agent, studied the document and pointed out another section of the study, which says:
"Li and Brown (1980) provide empirical evidence to suggest that although proximity to industry and commercial areas impose negative externalities on nearby houses, this same proximity creates substantial benefits to households far enough away to avoid the sphere of influence from the negative externalities."
The Menifee Walmart location has been a hot topic of discussion, considering the increased traffic problems that would be created on an already overcrowded Scott Road bridge and the lack of business at the adjacent Shops at Scott complex. The question is, would the addition of such a popular store benefit local residents more than hinder them?
"Basically, the homes close to where Wal-Mart is put in suffer financial loss due to high traffic, noise, etc.," West said. "But homes more than 1-4 miles away just gain access to a high demand retailer with no real loss in value.
"While there is a lot of detail in the study, I feel that the 'forest through the trees' view is that Walmart usually builds in a growing economy or in places where they perceive demand. Menifee would be one such area, as well as Temecula, Murrieta, Hemet, etc. However, if the spot of construction is next to or near a residential area, it will likely get a value hit while further out areas will benefit.
"Menifee is growing into cityhood one retailer at a time. Getting a Walmart will further solidify that, but that doesn't mean it won't cause problems."