The effect of a new sports facility on property development: Evidence from building permits and a localized synthetic control

A leading edge of sports economics research over the last decade has been the impact of sports facilities on property prices. While there is near consensus of positive, distance-decaying price effects, the existing literature has yet to begin exploring the underlying causal mechanism of the price response. One possible mechanism is increases in building quality. This study tests for a sports-induced change in building quality as measured by building permits in census tracts in Sacramento, California, where a new arena for a professional basketball franchise opened in 2016. The identication strategy is a localized synthetic control where localization restricts the donor pool to census tracts in the city limits in order to hold building codes and permit administration constant over time. Baseline models and multiple robustness checks indicate the arena had no effect on permit activity.