The Value of Land Use Patterns and Preservation Policies

Abstract

In many communities, land-use and open-space preservation have become important concerns. Using a large dataset containing every home sale in the state of Massachusetts over 8 years, this paper simultaneously measures the impact of the mix of land-uses in the immediate neighborhood of a home on property values and the impact of a locallyimplemented program, the Community Preservation Act (CPA), which provides funds for local open-space and historic preservation as well as a ordable housing. I exploit the panel nature of the dataset to conduct a di erence-in-di erences analysis using local as well as house level xed e ects to overcome omitted variables bias. My results indicate that, on average, passage of the CPA reduces property values by about 1.5% in Massachusetts towns. However, when I allow the CPA e ect to di er by county, I nd some heterogeneity - it increases property values in some communities and reduces them in others. Variation in local spending priorities appears to have little impact on property values or the e ect of the CPA. Finally, I nd that cropland and pasture, as well as low-density residential development, are the most preferred local land-uses, and that homes are more expensive as one increases distance to highways and active rail lines.