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Saturday, September 28 • 10:10am - 10:45am
The Impact of High-Speed Broadband Availability on Real Estate Values: Evidence from United States Property Markets

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There are numerous factors that are known to have an impact of the value of residential real estate, including for example the energy efficiency of the building, the proximity of good schools, or the amount of crime in the neighborhood. This paper presents an empirical study of the impact of access to high-speed Internet on real estate values. In our research, we explore whether people are willing to pay a larger amount of money for real estate located in areas where high-speed broadband is available, than for a property that does not offer this amenity. We use unique data on broadband availability from the National Broadband Map for the years of 2010-2012, and combine this dataset with public information on residential deed transfers for the same time period. Using a hedonic price framework, we investigate why real constant-quality real estate prices vary, where we define a constant-quality real estate as a residential property where structural, land, and community attributes are all held constant.

Estimating the value of high-speed internet availability through property markets creates challenges for such an empirical research. On one hand, residential properties in markets with high-speed broadband access would be expected to have greater value but, on the other hand, good quality broadband infrastructure is also expected to be rolled out first in high income areas with high real estate values. To separate these two effects, we use an econometric model and control for the unobserved consumer demand effects that are jointly positively correlated with residential real estate prices and high speed Internet roll out. Included in the paper are also tests of hypotheses derived from spatial econometric theory and the urban amenity literature.

To demonstrate how academic property valuation theories work in practice, we discuss several examples based on the combined master data set. In particular, we empirically observe differences in value across regional markets; the changes in the value of broadband access over time; and analyze the potential implications for the policymakers. Our research differs from previous studies in that the primary focus of our analysis is the impact of high-speed broadband on the residential property values. The paper adds to the existing literature by conducting an empirical analysis of these impacts, with the ultimate objective of measuring the value of broadband Internet through real estate markets across the US. The outcome of this work could offer valuable contributions for both fields of telecommunications policy and property valuation research.

avatar for Gabor Molmar

Gabor Molmar

Interdisciplinary Telecommunications Program, University of Colorado Boulder

Saturday September 28, 2013 10:10am - 10:45am
GMUSL Room 120

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