by Adam Bonislawski | Mansion Global
But owning a house too close to the a major road can lower real-estate sale prices, according to a transportation study
When it comes to home values, it’s good to live close to a highway—but not too close.
That’s the finding of a 2016 study in the journal Transportation that used housing data from the Dutch Land Registry that looked at sales prices of 269,000 homes before and after the 2004 completion of two large highways in the eastern Netherlands.
The researchers found that highway construction has a "generally positive" effect on area housing prices. However, that effect varies depending on a home’s precise location. Improved accessibility raised home values, but for properties right by the new road this effect was counteracted by increases in noise and traffic density.
Because the positive effects were spread across tens of thousands of home, while the negative effects were concentrated among several hundred homes, "the net effect [of the new highways] was overwhelmingly positive," said Or Levkovich, a postdoctoral fellow in spatial economics at Vrije Universiteit Amsterdam. He and the other researchers found that the highway developments boosted home prices by roughly 5% in the run-up to their opening and by 2.5% to 4.3% in the years following their completion.
Those increases, however, were driven entirely by housing near one of the two highways, the A50. Houses near the other highway, the A30, actually lost value in the run-up to completion (4%) and showed no increase in value following completion. Dr. Levkovich and his colleagues suggest that this is likely due to the fact that homes along the A30 experienced only a slight increase in accessibility, as many were already located near major roads.
The results track with those from a 2015 study published by researchers at Florida Gulf Coast University and appraisal firm American Valuation in the Journal of Sustainable Real Estate that found a similar balance between noise and accessibility.
In that paper, the researchers used a spatial regression to look at 1,025 single-family homes in 19 suburban Florida neighborhoods located along existing highways.
They found that sales prices were 4% lower for homes directly adjacent to the highway compared with homes not directly adjacent. The study also found that sales prices fell 0.8% with each unit increase in traffic volume.
On the other hand, prices dropped 2.5% with each additional mile of driving distance between a house and the nearest highway on-ramp, indicating that, as with the Dutch study, proximity to transportation is desirable.