Power Lines Don’t Affect Property Values: The Appraisal Journal
Cover Story Cites 10-Year Study of 1,200 Home Sales
CHICAGO (July 30, 2009) – A property’s value is not affected when the home is located close to high-voltage transmission lines, or when those power lines are visible from the home, according to an article appearing in The Appraisal Journal’s summer issue.
The Appraisal Journal is a quarterly publication of the Appraisal Institute, the nation’s largest real estate appraisal association.
“High-Voltage Transmission Lines: Proximity, Visibility, and Encumbrance Effects,” by James A. Chalmers, PhD, and Frank A. Voorvaart, PhD, cites a study of 1,200 home sales in Massachusetts and Connecticut from 1998 to 2007. The study also found that a transmission line easement adjoining a home’s property had only a small negative effect on the sale price.
“In the four study areas examined here, there is no evidence of systematic effects of either proximity or visibility of 345-kV (kilovolt) transmission lines on residential real estate values,” the article states. “Encumbrance of the transmission line easement on adjoining properties does appear to have a consistent negative effect on value, although the statistical significance with which it is measured varies.”
The authors note that researchers and appraisers may mistakenly attribute a negative price impact to proximity, while the true impact is associated with the transmission line easement.
“The professional literature cited, combined with the results reported here, support the position that a presumption of material negative effects of HVTLs (high-voltage transmission lines) on property values is not warranted,” the article states.
Chalmers has a PhD in econom¬ics and is a certified general real estate appraiser in Arizona. From 1990 to 2002, he led the real estate damages practice at Coopers & Lybrand and, after its merger, at PricewaterhouseCoopers. Since retiring from PricewaterhouseCoopers in 2002, he continues to consult in the area of real estate damages as the principal of Chalmers & Associates, LLC, located in Billings, Mont.
Voorvaart is a vice president with the Dallas office of Analysis Group, where he special¬izes in real estate litigation consulting. He has evalu¬ated class certification criteria and property value diminution claims in residential class action litigation, and also has evaluated the validity and applicability of experts’ valuation methodologies to determine dam¬ages to real estate on a classwide basis.
Other articles in The Appraisal Journal’s summer issue include:
“Expert Testimony: Regression Analysis and Other Systematic Methodologies,” in which authors Peter Colwell, PhD, John A. Heller, JD, and Joseph W. Trefzger, PHD, study trends in the courts regarding expert testimony on real property value, noting that courts may increasingly favor regression analysis over more traditional valuation techniques.
“Charter Schools – An Appraisal Challenge,” by Richard E. Polton, MAI, and Joseph Portelli, which examines the special features of charter schools that makes appraising them especially challenging.
“Nursing Facilities: Assets, Interests, and Ownership Structures,” by James K. Tellatin, MAI, which looks at the elements of nursing facilities that contribute to the overall value of a nursing facility.
The summer issue also includes the “Financial Views” column by James R. DeLisle, PhD, analyzing the latest economic conditions, especially the erosion of the commercial real estate market. The “Residential Appraising” column by Mark Rattermann, MAI, SRA, shows how residential appraisers can find the market data required to complete Fannie Mae’s new Market Conditions Addendum (Form 1004 MC). This data is crucial for an accurate market analysis in the current tumultuous real estate market.
To view the online version of The Appraisal Journal, go to TAJ Summer 2009 - Table of Contents.
The Appraisal Institute is a global membership association of professional real estate appraisers, with 25,000 members and 91 chapters throughout the world. Its mission is to advance professionalism and ethics, global standards, methodologies, and practices through the professional development of property economics worldwide. Organized in 1932, the Appraisal Institute advocates equal opportunity and nondiscrimination in the appraisal profession and conducts its activities in accordance with applicable federal, state and local laws. Members of the Appraisal Institute benefit from an array of professional education and advocacy programs, and may hold the prestigious MAI, SRPA and SRA designations. For more information regarding the Appraisal Institute, please visit www.appraisalinstitute.org.