How does new apartment construction impact nearby home values?Oct 04, 2021 03:17PM ● By Justin Adams
A new study from the Kem C. Gardner Policy Institute suggests that new apartment buildings raise, not lower, the value of nearby homes. (Justin Adams/City Journals)
By Justin Adams | [email protected]
Whenever a new multi-family housing development gets proposed these days, it seems to always draw opposition for a number of reasons. One given reason is a belief that such projects will lead to decreased property values for already existing homes in the area. But is that actually what happens?
A recent study from the Kem C. Gardner Policy Institute (from the David Eccles School of Business at the University of Utah) sought to find the answer to that question.
The study looked at all Salt Lake County apartment buildings constructed between 2010 and 2018, then measured the change in value for homes located within half a mile of the new apartment buildings and homes more than half a mile away.
They found that single-family homes within half a mile of new apartment buildings appreciated slightly faster than single-family homes more than half a mile away (10% vs. 8.5%).
In presenting the Institute’s findings to the Sandy City Council, Senior Research Fellow Dejan Eskic offered an explanation for why this might be.
The construction of new apartments, he said, “can revitalize older property,” “increase the attractiveness of the nearby area,” and “serve as a catalyst for positive economic growth.”
“This data is definitely very gratifying to know as we have to face these issues of providing more housing,” said Council Member Cyndi Sharkey.
Council Member Monica Zoltanski questioned whether the study accounted for things like increased traffic or classroom sizes (some of the negative externalities commonly associated with high-density housing).
According to Eskic, such factors are incorporated into the study, since it looked at actual home prices from the last 10 years, and home prices take into account quality of life considerations in a given area.