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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As the world watches the Paris 2024 Olympic Games, future host cities face immense pressure, with their decisions under intense media scrutiny. This can lead to rushed judgments and the marginalization of diverse perspectives, driven by the urgency to meet bid deadlines. The impact of hosting the Olympics on the real estate market is highly variable and specific to each city and context, challenging the notion of a uniform economic benefit.
Constantine Kontokosta, PhD, an associate professor at New York University, challenges the assumption that hosting the Olympics guarantees positive outcomes for a city's residential real estate market. In his study, "The Price of Victory: The Impact of the Olympic Games on Residential Real Estate Markets," published in Urban Studies, Kontokosta employs an adjusted interrupted time-series approach to examine six Olympic host cities: Barcelona, Sydney, Los Angeles, Calgary, Atlanta, and Seoul. His findings reveal significant disparities in housing market outcomes. According to Kontokosta's analysis, Barcelona and Sydney experienced substantial increases in housing prices following their respective Olympic Games. In contrast, Los Angeles, Calgary, and Atlanta witnessed negative effects on housing prices, while Seoul showed no major change. These results indicate that the economic benefits of hosting the Olympics are not uniformly distributed and can sometimes lead to adverse outcomes.
The Kontokosta study underscores that while hosting the Olympics can occasionally enhance local housing markets, it can also result in significant drawbacks that may not justify the costs. The uneven distribution of benefits means that not all residents gain equally, and some neighborhoods may suffer negative consequences. For instance, Los Angeles, Atlanta, and Calgary viewed the Olympics as opportunities to enhance infrastructure and elevate their regional status. However, the minimal or negative impact on housing prices in these cities suggests that the financial burdens of hosting the Games may outweigh the potential benefits.
As an editorial comment, it is worth noting that despite the negative impacts on residential prices observed in Los Angeles, the city is set to host its third Olympic Games in 2028. This decision suggests the presence of an independent variable with statistical significance that may have been overlooked by the author.
Kontokosta's research emphasizes the need for a nuanced understanding of the economic implications of hosting the Olympics, urging policymakers to consider the diverse and often unpredictable effects on local real estate markets.
Reference: Kontokosta, C. (2012). "The Price of Victory: The Impact of the Olympic Games on Residential Real Estate Markets." Urban Studies, 49(5), 961-978.