Research

Study links land use and nearby property values

University Park, Pa. -- Agriculture and other land uses that provide open space increase the value of houses located within a quarter-mile radius, while landfills and large-scale animal operations lower the value of nearby houses, according to a new study by researchers in Penn State's College of Agricultural Sciences.

The study, summarized in the report "The Impact of Open Space and Potential Local Disamenities on Residential Property Values in Berks County, Pennsylvania," was authored by Richard Ready, assistant professor of agricultural and environmental economics, and Charles Abdalla, associate professor of agricultural and environmental economics.

The researchers collected sales prices and other information on more than 8,000 Berks County homes sold between 1998 and 2002, along with information on nearby land uses. A geographic information system and statistical tools were used to analyze the data.

"This kind of information can be used by local officials to evaluate the consequences of planning and zoning decisions and efforts to preserve open space in their communities," says Ready.

"Undoubtedly, there will be interest in applying the Berks County results elsewhere," Abdalla says. "But until more research is conducted in areas with conditions that differ from Berks County, care should be used in trying to generalize these results." The researchers said Berks County was well suited for the study because data was readily available and the county has a mix of land uses and agricultural production.

The study found that open space -- including forested acreage and grass, pasture and crop land -- located within a quarter-mile of a house had the largest positive effect on the value of that house. Large-lot, single-family residential land had a positive effect almost as large. Commercial, small-lot single-family residential, multi-unit residential, and industrial land uses were less favorable for nearby property values.

Ready says these results can be used to predict the effect of land-use change on nearby residential property values. "For instance, if a 10-acre farm is replaced by a shopping center, we would expect property values of homes located within one-quarter mile to decrease by 1.3 percent," he explains. "Construction of a high-density or multi-unit residential development on that farmland would have an even greater negative impact -- about 2 percent. But construction of large-lot, single family houses would have essentially no impact on nearby home values."

For land uses farther than a quarter-mile but less than a mile away, commercial land had the greatest positive impact on a home's value, followed closely by large-lot, single-family residential.

The researchers found that landfills and large-scale animal operations have negative influences on nearby house prices. "A landfill located about a half-mile from a house decreases that house's value by about 7 percent," Abdalla says. "Large-scale animal operations -- including dairy and beef cattle, hog and poultry facilities -- within a half-mile lowered the price of a house by 4 percent." The study found no difference in property value impact due to animal species or size of the operation. The results also indicated that the impact of large-scale animal operations on property values decreases with distance and ceases to exist beyond one mile.

Abdalla notes that mushroom production facilities and airports also were found to have a negative, though much smaller, impact on nearby house prices. The study did not find a property value impact for sewage treatment plants.

The research was funded by the Northeast Regional Center for Rural Development, located at Penn State's University Park campus, and by Citizens for Pennsylvania's Future, Harrisburg. Two versions of the final report from the study are available: a long version containing all of the technical details, and a shorter version intended for a broader audience. Both reports are available on the Web at http://www.landuse.aers.psu.edu/

Last Updated March 19, 2009