Panel Paper: Do School Shootings Erode Property Values?

Thursday, November 7, 2019
Plaza Building: Lobby Level, Director's Row H (Sheraton Denver Downtown)

*Names in bold indicate Presenter

Juan Sebastián Munoz, University of Illinois, Urbana-Champaign and Ruchi Singh, University of Georgia

School shootings are a type of crime that is unpredictable; they are exceptionally traumatic events, but are highly unlikely to be repeated in the same location. Our research examines the effects of such occurrences on residential housing values and sheds light on mechanisms behind this relationship.

Using a difference-in-differences strategy, we find that house prices within the affected school districts fall by an average of 7.8 percent (or $15,051 on average) as compared to the neighboring school districts, and its effects persists for, at least, five years. Additionally, we find that in the wake of such an incident the number of transactions decreases in the affected school district.

We focus on mass shootings that took place in schools during the period 1998 to 2014. Our analysis uses two key sources of data: 1) the Stanford Mass Shootings of America data project; and 2) individual transaction and assessment records from CoreLogic for the school districts where shootings took place and the adjacent school districts for the period from 1991 to 2017.

Our results are robust to alternative identification strategies. First, we use a boundary discontinuity approach within a difference-in-differences framework to compare houses within half a mile of the school-district boundary to better control for unobserved amenities. The effect is stronger under this specification; prices in these areas fall by 13.6 percent (or $20,337 on average). Second, we use propensity score matching approach, within the difference-in-differences framework, and find smaller but still significant decrease in prices of 3.5 percent.

We show that our results are not driven by changes in the composition of houses sold. Furthermore, graphical evidence and falsification tests provide no evidence of spurious negative effects due to differential housing price trends. These tests support our findings that the declines we document in housing prices are indeed due to the mass shooting incidents.

We then explore mechanisms that explain the decrease in housing demand in affected schools districts. We first rule out that housing demand decrease because homebuyers are afraid of experiencing an associated crime in the aftermath of the shooting episode. Our difference-in-differences estimates suggest that crime did not increase in cities were the shooting occurred.

Next, we show that the decline in prices is higher for houses with more bedrooms, which serve as a proxy for family-size. Households with children who attend local schools are more likely to be affected. The results suggest that the response is larger for houses with more bedrooms, suggesting that the response is larger in case the family has children. We also find a decrease in enrollment and number of teachers in schools that experienced a school shooting and neighboring schools that did not experience the shooting but that are within the same school district. This suggest that the households want to avoid that school district, which is being capitalized into house prices. Finally, we find no effect on the price of non-residential properties. These findings suggest that lower perceived quality of schools represent particular concerns for potential homebuyers.