The reaction of housing prices to information on superfund sites: A semiparametric analysis of the Tacoma, Washington market

We use a semiparametric estimator to construct house price indices, which c over the time period 1977 through 1993, at half-mile intervals from a conta minated industrial site. The site, the former Asarco smelter in Tacoma, Was hington, was designated a Superfund site in November 1991. Results of studi es of contamination were released to the public prior to 1991. The parametr ic portion of the model includes standard housing characteristics such as h ouse size, lot size, age, a construction quality index, and the presence of a view. How sale price varies with time, which is the critical variable, i s modeled nonparametrically. We find that the price indices from the nonpar ametric estimator differ significantly from those from even highly flexible parametric specifications. The release of information appears to have had little effect: the housing market apparently capitalized the negative effec ts of proximity to the smelter.