Design and Economics Research Requirement—Carleton University, Ottawa,
Canada
Confidential and Proprietary
Memo: Research Student wanted for assistance with research into the
Relationship between Higher Urban Density and Property
Values
Level: Masters Degree
Output: A. Data and analysis for masters level thesis; B. Participation in authorship of research paper
Fields: Economics, Business, Architecture, Real Estate and Development
Working with: Dr. Bruce M. Firestone
Discussion:
Many people feel that higher urban densities in their immediate neighborhoods can cause their property values to fall. There is a real fear that by adding denser forms of housing such as townhomes, row houses, duplexes, granny flats, apartments, co-ops, group homes or condominiums to an established neighborhood that property values for nearby residences will fall.
At the same time, considerable pressure is being exerted by environmental groups, architects, real estate developers, municipal officials, and others to densify existing urban areas to make better use of in situ infrastructure, public transit and to make cities more interesting and diverse places to live and work.
Complicating this debate is the neo-urbanist agenda that promotes adding certain commercial uses to residential areas—work-at-home, cottage industry, corner stores, local pubs and such. This adds a second question to the mix—does adding limited commercial uses to an existing residential area, essentially intensifying it, increase or decrease property values in the immediate neighborhood?
The questions therefore are twofold:
1. Does densification increase or decrease property values all else being equal*—for the individual property owner undergoing densification and for the immediate neighborhood?
2. Does intensification (adding limited commercial uses) increase or decrease property values all else being equal*—again, there are two dimensions to this question relating to the individual property owner and the immediate neighborhood?
(* The underlying
assumption must be that property values can be normalized for such variables as
social order. The Broken Windows Syndrome suggests that any negative
change in social order brings about a negative change in property values. Hence,
if densification or intensification has an impact on social order (in the form
of petty crime, major crime, graffiti, vandalism, homelessness and so forth)
then this is an important variable to control for.)
Methodology:
We will study existing neighborhoods using data from Provincial Assessment Roles, home sale records at the Provincial Land Registry and from real estate boards.
This will be an economic study using regression analysis techniques, both longitudinal and cross-sectional regression analysis.
Conclusion:
The fierce, often emotional debate between neo-urbanists and their allies on one side and many community association members and not-in-my-backyard (nimby) activists on the other is proceeding with an astonishing lack of data to justify any type of rational discussion. Perhaps part of the solution to this debate is to provide both parties with an analysis that either proves or disproves the thesis questions.
In the event that neighboring property values can be shown to remain unchanged or even increase with either densification or intensification then there is less argument to make against either and neo-urbanists, architects, town planners, municipal officials and others can proceed in the remaking of North American towns and cities with less opposition from sitting owners.
In the event that the opposite holds true, novel solutions such as negative property taxes may come into force and effect.
For more information, please contact:
Bruce M. Firestone
http://www.dramatispersonae.org/
Copyright. Dr. Bruce M. Firestone, Ottawa, Canada. May 2002.