Power Lines’ Impact on Sales Depends
on Property: The Appraisal Journal
CHICAGO (March 20, 2012) – Transmission lines are more likely to have a negative impact on sales when a property has a residential use or small lot size, or when similar properties without transmission lines are available in the market, according to an article published this week in The Appraisal Journal.
The Appraisal Journal is the quarterly technical and academic publication of the Appraisal Institute, the nation’s largest professional association of real estate appraisers. The materials presented in the publication represent the opinions and views of the authors and not necessarily those of the Appraisal Institute.
“High-Voltage Transmission Lines and Rural, Western Real Estate Values,” by James A. Chalmers, Ph.D., looks at the impact of transmission lines on sale prices and time on the market. It reports the findings of an 11-year study of property sales across 640 miles and 15 counties in Montana. The study includes sales of rural subdivisions and agricultural, recreational and mixed-use properties; prior transmission line studies have focused on densely populated urban areas.
The study offers a new perspective because it examines the impact of transmission lines on individual properties, unlike previous studies, which only report the average effect of transmission lines in an area. According to Chalmers, studies that focus on the overall average impact of transmission lines may miss significant, but rare impacts on specific properties.
The current study shows the impact of transmission lines on the property sales varies significantly depending on a property’s use, size and uniqueness.
In the study, sale prices of recreational and agricultural property were not affected by the presence of transmission lines, while some residential properties near transmission lines sold for 20 to 50 percent less than comparable residential properties.
The study also finds that smaller properties are more vulnerable to transmission line impact; Chalmers observes that with “larger properties, there is a greater likelihood that the location of the lines will not interfere with the use of the property.”
Finally, the results show that if a property is unique because of its location, view, or other features, the property is less vulnerable to any negative effects from the presence of transmission lines. According to the author, a property’s other attributes may dilute the transmission lines’ impact. On the other hand, if a property with transmission lines is otherwise similar to other properties, it is more likely to sell for less or take longer to sell.
The author cautions that negative effects from transmission lines cannot be presumed and are generally infrequent.
Read High-Voltage Transmission Lines and Rural, Western Real Estate Values in the Winter 2012 issue of The Appraisal Journal.
Also in The Appraisal Journal’s Winter 2012 issue:
“Correcting for the Effects of Seasonality on Home Prices,” by Norm Miller, Ph.D., Vivek Sah, Ph.D., Michael Sklarz, Ph.D., and Stefan Pampulov, shows how, depending on the time of year, sale prices fluctuate almost 3% on the downside and almost 2 percent on the upside. This seasonal difference may be important in appraisals that compare sale prices of similar properties.
“Market Conditions Adjustments for Residential Development Land in a Declining Market,” by Robert M. Greene, Ph.D., MAI, SRA, offers a method for measuring price declines in undeveloped subdivision land in markets where there are few or no comparable sales.
“Site Essentials of Convenience Stores and Retail Fuel Properties,” by Robert E. Bainbridge, MAI, SRA, looks at the design features of convenience stores that generate income and consequently influence property value.
The Winter issue also includes a “Residential Appraising” column by Sandra K. Adomatis, SRA, which offers a step-by-step explanation of how appraisers can use the Appraisal Institute’s new Residential Green and Energy-Efficient Addendum to describe the green or energy features of a home. The completed form can then become part of the appraisal report.
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The Appraisal Institute is a global membership association of professional real estate appraisers, with nearly 23,000 members in nearly 60 countries 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. Learn more at www.appraisalinstitute.org.
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