Open Space and East Grand Rapids Property Values – A GIS AnalysisTYLER LANCASTER

Introduction

The purpose of this study is to show the effect of open spaces on surrounding property values.

Importance:

● To help inform people about outside factors that can determine their property value.

● To show real estate investors reasons to invest in these areas.

● Help planners make better zoning decisions.

Literature Review

What determines land usage and price?

● Von Thunen model

● Once the realism of a network-based transport system and a geographical information system for land cover is integrated, we realize that the theoretical foundations needed to guide such an analysis come from the von Thunen model (O’Kelly, Bryan, 2004).

Literature Review

● Hedonic model

● Invoking several assumptions about the housing market, including the requirement that the housing market is in equilibrium and the study area represents one market for housing services, the marginal value for a small change in an attribute can be estimated from the hedonic price function (Bolitzer, Netusil, 2000).

Literature Review

● Externalities

● Highway traffic noise: each dba reduction in high noise values resulted in a .2% increase in property values (Nelson, 1975)

● Air pollution: 10% reduction in air pollution resulted in an average property value increase of $1,138, 20% reduction resulted in $2,846 average increase, and 50% reduction resulted in $5,691 average increase (Harrison, Rubinfeld, 1978).

Literature Review

● Externalities continued

● Crime Rates: ZIP codes in the top decile of crime reduction during the 1990’s saw property values increase from 7%-19% on average (Pope, 2012).

● Proximity to railroads: When moving from a distance of 100 meters to within 20 meters of a railroad, property values were reduced by 23% on average (Strand, Vagnes, 2001).

Methods

Data

● Collection of secondary data.

● Graduated color map representing selling values was generated.

● Any non-residential building omitted (libraries, schools, businesses)

● Buffer zones created.

● Near tool used to calculate distances.

● Pricing and distance data exported to excel.

● Scatterplots created in excel.

● T Test run in excel.

East Grand Rapids Property Values

Results

Results cont.

Conclusion

● There is a moderate relationship between proximity to parks and lakes.

● Selling value of homes in proximity to the trail were much more random.

Future Research

● A hedonic model could explain more of the externalities affecting property values.

● Research how property values relate to open spaces in other cities, and also include other externalities in the study.

Bibliography

● O’Kelly, Morton; Bryan, Deborah. 2004. Agricultural location theory: von Thunen’s contribution to economic geography. Progress in Human Geography. Vol 20, no. 4, pages 457-475.

● Bolitzer, B.; Netusil, N.R. 2000. The impact of open spaces on property values in Portland, Oregon. Journal of Environmental Management. Vol. 59, Pages185–193.

● Nelson, Jon. 1975. The effects of mobile-source air and noise pollution on residential property values. Center for the study of science of science policy institute for research on human resources. Pages 4-5.

● Harrison, David; Rubinfeld, Daniel. 1978. The Air Pollution and Property Value Debate: Some Empirical Evidence. The Review of Economics and Statistics. Vol. 60, no. 4, pages 635-638.

● Pope, Devin; Pope, Jaren. 2012. Crime and property values: Evidence from the 1990s crime drop. Journal of Regional Science and Urban Economics. Vol 42, Issues 1-2, Pages 177-188.

● Strand, Jon; Vagnes, Mette. 2001. The relationship between property values and railroad proximity: a study based on hedonic prices and real estate brokers' appraisals. Transportation. Vol 28, no. 2, pg 137.