The Effect of Substance Use Disorder Treatment Centers on Property Values

Substance use disorders (SUDs) are a major public health concern in the United States and other developed countries. There is an extensive economic literature estimating the social costs associated with SUDs in terms of healthcare, labor market outcomes, crime, traffic accidents, and so forth. However, beyond anecdotal claims that SUD treatment centers (SUDTCs), settings in which patients receive care for their SUDs, have a negative impact on property values, there is scant empirical work on this question. In this paper, we test for the impact of SUDTCs on residential property values using detailed property data from Seattle, Washington, and SUDTC location, entry, and exit information. To mitigate bias from the potential endogeneity of SUDTC location, we apply a spatial differences-in-differences (SDD) empirical strategy, which uses the location of properties to construct treatment and comparison groups. Our findings suggest that SUDTCs endogenously choose to locate in lower value areas, and baseline models imply that the entry of an SUDTC leads to a modest but statistically significant reduction in property values. However, when an SDD model is applied, we find no effect of SUDTCs on property values. Numerous robustness checks are implemented for distance band specifications and time dynamics, which all document similar, null results. These findings suggest that concerns regarding stigma associated with proximity to an SUDTC may be overstated.