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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In this study conducted by Marian J. Barnes [1], the impact of high voltage transmission lines (HVTLs) on residential property values is investigated, focusing on a subdivision in Fond du Lac, Wisconsin. The subdivision, Meadowlands Village, contains 71 improved properties sold between 2012 and 2016, with homes ranging from 1,218 to 2,115 square feet. The properties are encumbered by a 138 kV transmission line, with varying easement widths on the south and west sides.
The analysis explores the factors influencing property value, categorizing them into utility loss or proximity impact. Utility loss pertains to restrictions on land use outlined in the easement document, while proximity considers visual and noise impact, as well as stigma. The study finds that the loss in utility is minimal, as the encumbered land is primarily used as yard space.
Two methodologies are employed to assess the impact on property value: multiple regression analysis and a simplified statistical analysis. The regression analysis considers various factors, including the presence of the easement, bedrooms, bathrooms, age, lot size, and garage spaces. Results show that age and the number of bathrooms are the only features reliably predicted by the model, with the HVTL easement not significantly impacting price. The statistical analysis, accounting for emotional factors in home buying, reveals that properties with the easement sold for up to 4.22 percent less than those without, consistent with similar studies.
Notably, the study observes specific cases, such as one property with a pole on the lot, where structural improvements mitigated the impact on value. Another case challenges the theory that close proximity to an easement necessarily reduces property value. Despite these variations, the overall findings align with existing research, indicating a small and unpredictable impact of HVTLs on property values. The study emphasizes the uniqueness of each property and encourages right-of-way professionals to collect and analyze data in their specific project areas for a more accurate assessment of HVTL impact.
[1] Barnes, Marian. “Transmission Lines and Proximity Impact - Improved Residential Property Study Reveals Marginal Effect on Value.” Right of Way Magazine, 2016.