Assessing the Effect of Parks on Surrounding Property Values Using Hedonic Models and Multilevel Models

Abstract

The various kinds of park benefits have been extensively discussed in the literature in order to suggest a better living environment for urban residents. Among them, the economic benefit has been suggested as the crucial one to support park development and management. A number of studies have been studied the economic impact of parks on surrounding property values and suggested that park proximity brings increment in property values. Some studies further considered park characteristics. The general suggestion from the literature was that parks primarily for passive recreation tend to have a positive impact on nearby property values and parks mainly for active recreation are more likely to introduce disturbance and therefore a negative impact on adjacent property values. However, studies on how individual park facilities influence property values are rarely found. While park facilities are essential for providing diverse recreational opportunities, their economic impacts should also be considered when designing a park system. A more detail analysis on the impacts of the diverse features in parks can be suggested in order to better understand the differences among the many kinds of park features. Therefore, the first objective of this study is to examine the impacts of many park facilities on neighboring residential property values within the City of Minneapolis, Minnesota, United States. This study followed the literature and applied the hedonic pricing model to examine the impact of park facilities on nearby property values. However, since the data are not from the single level (i.e. properties are individuals at a lower level while the parks are the contextual effect at a higher level), it is suggested that such single-level model may not be appropriate. A multilevel approach has been suggested when the hierarchical data is employed and to avoid error may result from aggregating or disaggregating data from one level to another. Therefore, the second objective of this study is to apply the multilevel approach as an alternative to examining the impact of park facilities on adjacent property values. Results suggested that the general guideline suggested in literature can be followed, but significantly different impacts are associated with different park facilities.