Real estate research provides evidence that properties potentially exposed to perceived or actual risks may experience price impacts. Looking Under the Hood reviews publications that illustrate the theoretical, methodological, and data challenges faced by scholars and practitioners studying detrimental conditions and their impacts on property values.
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In February 2023, a Norfolk Southern train derailed in East Palestine, Ohio, releasing hazardous chemicals into local waterways. Shortly thereafter, a mandatory evacuation was issued for residents within a mile of the site as authorities conducted a controlled burn of the chemicals, which generated a toxic plume extending for several miles. This high-profile environmental disaster triggered a massive response from state and federal officials and prompted the railroad to create a Value Assurance Program (VAP) to protect property values for approximately 5,500 local homes. The event is considered one of the most visible contamination incidents in modern U.S. history, involving the release of roughly 116,000 gallons of vinyl chloride.
To analyze the real estate impact of this disaster, Simons et al.[1] employed a standard log-linear, hedonic, difference-in-difference (DID) regression model. The study used a robust dataset of over 3,000 home sales from 2018 to 2024, comparing 98 transactions within the affected VAP area with sales in four nearby control communities. Researchers hand-verified structural data against tax records and incorporated various control variables, including square footage, property age, neighborhood demographics, and school districts. Additionally, the study integrated a contingent valuation (CV) analysis using over 1,000 survey responses to measure buyer perceptions across five contamination scenarios, including properties near contaminated creeks and those within the initial evacuation zone.
The investigation concluded that residential property values in the affected VAP area dropped by approximately 14% compared to control properties following the derailment. Specifically, the regression models indicated a 12.8% discount for homes anywhere in the VAP, while properties located outside the evacuation zone but within the VAP saw discounts of up to 15.8%. Beyond price diminution, the study found a significant impact on market liquidity: homes in the affected area sold roughly 26% slower, averaging about 11.5 additional days on the market, than those in unaffected areas. These findings aligned with the CV survey results, which estimated value losses between 17% and 28% for the top quarter of the market and suggested that nearly 40% to 50% of potential buyers would refuse to make an offer on impacted homes altogether.