Limited impact of roadway construction and traffic congestion on nearby housing prices

Abstract

Constructing new roads and upgrading existing roads are two common approaches to address congestion caused by increasing traffic volumes. But they can also impact local communities if roads are built through neighborhoods or existing roads and intersections are widened and placed closer to nearby homes. In this paper, we estimate how local communities are impacted by these changes using data on housing prices near roads and roadway construction projects. We find that homes near major roads sell for less than homes further away, but that congestion-reducing road improvements only lead to small average increases in nearby home prices. Our results suggest that major roads in close proximity negatively impact housing prices by affecting neighborhood aesthetics, and this relationship is not contingent upon the level of traffic on the roads. Our results can help policymakers consider the external costs borne by local communities when conducting cost-benefit analyses of roadway expansions or improvements.