Quieter Streets Linked to Increase in Home Prices

Researchers find that when sound barriers are constructed along busy highways, the prices of homes nearest those barriers spike

By Lisa Ward of The WSJ. 

This reminds me of negative externalities which are costs imposed on third parties without compensation. Driving your car creates noise and that is a cost for people living near the highway. By creating quieter neighborhoods, the houses there become more valuable because the cost of noise is no longer being imposed on them.

Excerpts from the article:

"in the five years after noise barriers were built, the price of properties within 100 meters (about 109 yards) of a barrier saw a rise of almost 6.8% compared with homes in a control group."

"The barrier’s effect on property values declined with distance"

There were "price increases of about 3.9% for homes located 100 to 200 meters from a newly constructed sound barrier, 3.1% for homes located 200 to 300 meters from a barrier and 2.8% for homes 300 to 400 meters from a barrier."

"there is an almost 1% jump in property values for every decibel of traffic noise muffled by the average sound barrier"

"Five years before the construction of the sound barrier, home prices in both the treatment and control groups moved in tandem, influenced by similar variables"

"five years after noise barriers were built, properties closest to the busy highway saw an immediate and largely permanent increase in property values, above and beyond any normal price moves."

"traffic noise reduces property values by about $110 billion nationally"

I wonder about the last item. It implies that if we got rid of all the noise, it would raise property values by $110 billion. There is certainly value in reducing noise since people would pay for such reductions.

But if all traffic noise were gone, owning a house in a quiet neighborhood would not have any added value since they would all be in quiet neighborhoods. Now maybe houses in previously noisy areas would become more desirable, so their value would go up because their demand would increase. But then demand for other houses (ones that were already in quiet areas) would fall and their value would fall.

In that case, some houses go up in value and others go down. Would total property value rise, fall or stay the same?

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