Real estate pricing research provides evidence that properties potentially exposed to perceived or actual risks may experience price impacts. Looking Under the Hood reviews publications that illustrate the theoretical, methodological, and data challenges faced by scholars and practitioners studying detrimental conditions and their impacts on property values.
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How do odor and noise impact an eminent domain appraisal? Wolff [1] examined the effects of an anticipated expansion of an existing sewage treatment facility and associated odor and noise easements on Arizona's residential and industrial property values. The subject, 925 acres of land used for cattle grazing and quarry purposes, is the subject of an eminent domain proceeding regarding 34.8 acres (8.7 acres of buildable area). Approximately 38% of the land area is designated as a floodplain.
It is important to note that this analysis was conducted within the context of eminent domain. To address the appraisal question, the appraiser applied market interviews and the sales comparison approach to measure any impact on property values. 22 sales of vacant land were analyzed, and 15 interviews were conducted.
The market interviews surrounding odor impacts indicated a 4% diminution in value to the buildable area. The noise was not stated to impact property values, and the odor was not significant for floodplain areas. For the sales comparison approach, the diminution in value estimate for properties proximate to sewage treatment plants was rounded to 12%. In general, there was significant evidence that proximity to the sewer treatment plants was a negative influence on property values. Given that the existing facility produced odor, the incremental impact of the expansion was stated to be small. In reconciliation, the appraiser concluded an overall diminution of 4% for the buildable area of the subject property. For industrial use, the impact was stated to be negative but less than residential in magnitude.