Buying Into Bohemia: the Impact of Cultural Amenities on Property Values

Communities in both Europe and North America are encouraging the development of cultural amenities as a strategy for improving quality of life, attracting and retaining productive workers, and promoting urban revitalization. If these policies are effective then the presence of cultural amenities should increase the local demand for housing, and the value of cultural amenities should be reflected in house prices. The prospect of increasing house prices has in turn generated concern about the role of the arts and cultural amenities in the process of gentrification. Amidst these policy initiatives and expressions of concern about the impacts, there have been surprisingly few systematic studies of the impacts of cultural amenities on house prices. This paper helps to fill this gap. Using data from 11 Massachusetts cities, we estimate the impact of the local cultural non-profit sector on residential property values. We find that local availability of cultural amenities can have significant impacts on property values. This supports the potential role for cultural policies in urban revitalization, but also suggests that if such policies are to be distributionally neutral (or progressive) they must be combined with policies that ensure continued access to the community for low and moderate income renters. Corresponding author: Professor Stephen Sheppard Department of Economics Williams College Williamstown, MA 01267 USA e-mail: [email protected] 1 This research has received generous support from the Ford Foundation, the Massachusetts Cultural Commission, and the National Center for Real Estate Research. None of these organizations is responsible for errors or omissions in the analysis.