Toward More Inclusive Neighbourhoods

Property Values Unaffected by Non-Market Housing

In 1995, THE MINISTRY OF Housing, Recreation and Consumer Services decided to look at the issue of community resistance to non - market housing. This resistance -NIMBY, as it is commonly called - greatly slows or prevents the development of needed affordable housing at the same time as it precludes neighbourhoods from being inclusive and welcoming to all British Columbians. It was quickly realized that there are very few resources for housing sponsors to use to understand and address NIMBY in British Columbia.

As a result, the Minister asked five people, including a municipal councillor, a realtor and three representatives of non-profit societies, to form a special task group. Working with an independent consultant, the task group was asked to learn from previous experience in order to produce practical tools to assist those working to develop or acquire non-market housing. Their work has led to the publication of a series of guides.

This guide presents the results of seven property value studies undertaken by professional property appraisers as part of the task group's investigation.

Home ownership is perhaps the most significant investment made by any individual or family. All homeowners want to feel that their investment is secure and that, if and when they decide to sell their home, its value won't be negatively affected by their neighbours' properties. With high home prices, mortgage payments can consume a large proportion of a household's income, particularly in the province's fastest growing communities.

Nearly every rezoning, development permit or variance application evokes the claim that existing residents will see their properties devalued if a non-market development is allowed in the neighbourhood. Many local government politicians say that this is the most frequent concern at any public hearing. Too often, the discussion is based on speculation rather than fact.

A significant part of the task group's investigation involved looking at issues surrounding property values. Part of this work involved studies that examined the impact of five non market family townhouse developments and two group homes on the property values of surrounding homes. The five family projects had been subject to a contentious rezoning or development permit process; all had been criticized during the approvals period as being a negative influence on home prices in the area. One of the group homes went through a difficult permit approval process.

No Evidence of Negative Effects

In all seven cases, the appraisers found no evidence that the presence of the townhouse development or special needs group home negatively affected the sale prices of homes in the impact area. As can be seen from the summary of the property value studies, there were markedly similar patterns in each of the communities. House prices in the vicinity of the non -market project increased as much - and in some cases, more than - nearby areas of similar housing types and ages. There was no evidence of panic selling or extra - ordinary length of time on the market between the dates of listing and sale.

Tables 9 and 10 show the relative and absolute values of all seven projects. In five of the seven projects examined, despite a NIMBY factor, the average annual sale price increased more in the impact areas than in their control areas. Among the family projects examined, average annual price increases also exceeded the overall house price increases for the community as a whole in all but one of the projects.

Methodology and Selection of Developments

The appraiser's work program involved an analysis of the average prices of home sales within a pre-defined impact area, where value fluctuations, if any, would be expected to appear, in comparison with a nearby control area of similar sizes and types of homes.

The five non - market developments were selected through a review of all projects built under the Federal- Provincial Non-Profit Housing program. The criteria for selection were that the developments be:

  • located in rapidly growing areas of the province (Lower Mainland, Vancouver Island, Okanagan);
  • occupied for at least two years prior to the study;
  • located in an area of primarily single detached homes of similar age, size, amenities and condition;
  • located in an area where there were no other non-market projects or group homes in the impact or control areas; and
  • subject to a contentious rezoning or development permit process.

The criteria for selection for the two group home projects were that they be:

  • located in the Lower Mainland and on Vancouver Island;
  • occupied for at least two years prior to the study;
  • located in an area of primarily single detached homes of similar age, size, amenities and condition; and
  • located in an area where there were no other non-market projects or group homes in the impact or control areas.

A short description of each non - market family development and group home, along with the results of the property values analyses, follows.

Pacific Court - Nanaimo

Pacific Court is a 34-unit family townhouse project in the Harewood area of Nanaimo which was first occupied in 1991. The project's sponsor is Pacifica Housing.

The impact area associated with Pacific Court was within the boundaries of Third Street on the north, Watfield Avenue on the east, Fourth Street to the south and Wakesiah Avenue to the west. Sixty-eight residences are located in this area. The control area is located immediately to the south of the impact area and has a similar housing mix, street improvements and amenities. There are 54 residences in the control area. Over the period of investigation, 58 sales were recorded - 29 in each of the impact and control areas.

From 1989 to 1993, average house sale prices increased by a total of 95.1 per cent in the impact area, and by 88.8 per cent in the control area.

In addition to analyzing the average sale prices of homes in the impact and control areas, the appraiser searched and examined repeat sales in the two areas. When examining repeat sales, the appraiser found that there was little variation between the average market time (37 days) and average price increase per month (1.8 per cent) in the impact and control areas. Using both methods, the appraiser was able to conclude that the non-market housing project did not have a measurable impact on the prices paid for nearby single detached residences.

TABLE 1
Pacific Court - Property Values Comparisons

Year

Average Sale Price Impact Area

Average Sale Price Control Area

1989$62,000 $59,912

1990 $69,000$63,480

1991 $90,000$89,750

1992$106,956 $89,250

1993$120,929 $113,129

Source:
CitySpaces Consulting Ltd., derived from Non-Market Housing, Nanaimo, B.C.
R.E. Burnett Appraisals Ltd. August 1995.

Johnston Court - Surrey

Johnston Court is located in the Guildford area of Surrey at the western edge of a subdivision of single detached homes developed in the mid 1980s. Two market townhouse complexes are located to the north of Johnston Court.

For the purposes of this study, the impact area was limited to the 67 properties to the east of the project. The area selected as the control area is a 69-lot section of the neighbourhood two blocks west of the impact area. This area was chosen due to the constancy of prevailing conditions, including lot sizes, amenities and dwelling types and sizes.

There were 22 transactions in the impact area and 28 sales in the control area during the study period. Average sale price increases in the impact area were lower (+ 18.2 percent) than in the control area (+37.4 per cent) over the study period. This is primarily due to the fact that average house sale prices were relatively high in the impact area in 1991 since there was only a small number of sales, all of relatively higher-priced homes. When 1991 is eliminated, the average increase in the impact area was 18.1 per cent, while the control area was 17 per cent. The Surrey average overall during the same period was 13.3 per cent, which was surpassed by both the impact and control areas.

The appraiser concluded that average sale prices tended to increase at relatively the same rates in both the impact and control neighbourhoods during the study period. No significant effect was found on sale prices in the impact area due to the introduction of Johnston Court in 1993.

TABLE 2
Johnston Court -Property Values Comparisons

Year

Average Sale Price Impact Area

Average Sale Price Control Area

1991$196,000 $169,750

1992 $196,250$199,317

1993$219,200 $212,544

1994$231,750 $233,167

Source:
CitySpaces Consulting Ltd. derived ftom Social Housing Market Impact Study. Collingwood & Associates. August, 1995.

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