Dr. Mark Sunderman accepted for Publication in the Journal of Housing Research
For release: June 8, 2018
Dr. Mark Sunderman, Morris Fogelman Real Estate Chair of Excellence and professor of Finance, recently had a paper accepted for publication in the Journal of Housing Research. The paper is entitled, "The Value of Greenways: Memphis Shelby Farms Greenline as a Case Study." Dr. Sunderman coauthored the paper with Dr. Esra Ozdenerol from the Department of Earth Sciences at the University of Memphis and Dr. Ying Huang from the University of South Alabama. Dr. Huang is a former Fogelman College doctoral student.
Greenways are increasingly used for environmental, social, aesthetic, and recreational purposes and are believed to bring health benefits to nearby communities. In addition, the Greenways create new transit corridors to bike to work or to other recreation activities. This paper investigates empirically the value of greenways by analyzing their impact on surrounding property prices. Our study shows that cognitive distance (or straight-line distance), a measure of perceived financial benefit of greenways, produces biases. We show that a more accurate estimation of accessibility is the actual travel distance based on street network routes. We calculate the actual travel distance between the property and the nearest Shelby Farms Greenline's entry point to get a more precise measurement of the impact of the accessibility to the Shelby Farms Greenline on housing values.
In this paper we show that there is a statistically significant difference in the impact of the accessibility to the Shelby Farms Greenline between the cognitive distances and actual travel distance. We measure the benefit of greenways by showing that 3-mile actual travel distance range to greenways gives optimum distance accessibility and produces positive premium for nearby houses. However, the cognitive distance, a method commonly used by previous research, while not practical, has higher value impact than the actual distance. Moreover, the cognitive benefit decreases at a faster rate than the real benefit as distance to greenways increases. The results benefit the public by providing an accurate estimate of the distance range to the Shelby Farms Greenline. The 3-mile actual travel distance range adds premium to the proximity housing value.
Our results have an impact on the public at large and serve as a guide to local and state governments, as well as the federal government, in their effort in the valuation of the many tangible and intangible benefits associated with the greenways that are likely to increase nearby property values and hence, increase property tax revenues and appraisal values.