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Previous columns have reported the impact of parks, trails and golf courses located near homes on the value of residential properties and a city’s tax base. However, in addition to proximate distance, there are two other features of parks and open space that influence a property’s value: the proportion of park-like space in the locale and views from a property.
Park-Like Space in a Neighborhood
The mosaic of landscapes surrounding a property — proportion of park-like space, pattern of land use and a neighborhood’s character — influences price. Analyses using this measure focus on the broader availability of open space within an area, rather than on the more specific measure of distance and access to defined parks. This effect is most frequently measured by specifying the amount of open space as a percentage of either a neighborhood area or within a given radius around a property.
In a recent study that Sarah Nicholls, a professor in the department of business at Swansea University’s School of Management, and I published in Leisure Sciences, 27 studies were reviewed that investigated the impact on house prices of proportion of open space in the proximate area. All the studies were published in peer reviewed journals, which provided assurance that the research techniques producing the results were appropriate. Three primary trends emerged from the review:
- The amount of open space as a percentage of a neighborhood area has a positive impact on house price.
- Premiums were relatively small compared to those associated with the distance measure of proximity — typically between 1 percent and 3 percent.
- Premiums were higher for permanent open space whose definition included perpetual easements and designated park and conservation lands owned by public agencies or private organizations, such as land trusts, than for temporary or unprotected open space, which consisted of urban open space, agricultural lands and forested lands that did not have protective easements on them.
Park Views and Property Values
The importance of views in valuing properties was recognized several decades ago by the Appraisal Institute. The Institute recommends appraisers consider the view when estimating a property’s value, but offered no guidance on how to arrive at a premium amount. The challenge is formidable because what constitutes an attractive view is determined in the mind contemplating it, and each mind perceives it differently. When this is combined with a set of studies characterized by an array of different types and definitions of view, different communities, different cultural values, different measures and methods of analysis, and relatively small sample sizes, a wide range of findings is inevitable. Nevertheless, the empirical studies we reviewed offered some guidance.
It is widely acknowledged that views of iconic parks or waterfronts attract large premiums. For example, premiums for apartments with a view of New York City’s Central Park compared to those whose window viewshed was directed elsewhere have been estimated to be around 40 percent, while offices with a view of the park often command 100 percent premiums. However, since these iconic locations are atypical of most people’s housing options, they were excluded from this review, which focused on views of relatively “ordinary” prosaic green spaces. Because they are exceptional, views from properties in tourism areas where the main attraction is the scenery were also excluded. The review differentiated between views from street level and those from high-rise buildings.
Street-Level View Studies – The emergence of digital elevation models that can be used with geographic information system (GIS) land cover tools to develop three-dimensional landscapes has facilitated the ability to do large-scale studies of the effects of street-level views on house prices. Results from the 17 street-level view studies were mixed: two reported a negative impact; five showed no impact; two reported mixed results; and eight revealed the expected positive relationship. The premiums tended to range between 6 percent and 8 percent. The negative impact was a counterintuitive outcome. It was reported in studies that measured views of forests or woodlands and was attributed to the impeding extended views.
Elevated View Studies – It is almost axiomatic to recognize that prices go up with an apartment’s floor number, because apartments on higher floors have superior landscape views, are not as exposed to noise sources and are further away from pollution. However, an analysis of condominium and co-op apartment sales in Manhattan reported that height premiums were more nuanced:
Second-floor prices were 19 percent higher than first-floor apartments where prices were lowest. There was little change until a substantial increase for the sixth through ninth floors. This was attributed to views on these floors, enabling owners to clear New York’s ubiquitous six-story buildings, gaze over the trees in Central Park, or see far enough to admire the Hudson or East Rivers. The prices increased in small increments until the 12th floor, after which they tended to level off since the views from higher floors were often not any different from those at the 20th floor.
Given the ubiquity of high-rise buildings in cities and the frequency of articles in the popular press, which feature anecdotes relating to the value of views, there were surprisingly few scientific studies that analyzed the value of view premium. Results from the 10 elevated view studies were mainly positive, with six of them reporting a positive premium, two with mixed results and two revealing a negative premium. Distant views did not command a premium, but elevated views of parks close to a high-rise apartment building typically had premiums of 6 percent to 7 percent.
Assessment of the impact of parks on property values traditionally have been measured by distance. These results show this is an incomplete measure, since proportion of parks and greenery in a neighborhood and views also add value to residences.
John L. Crompton, Ph.D., is a University Distinguished Professor, Regents Professor and Presidential Professor for Teaching Excellence in the Department of Recreation, Park and Tourism Sciences at Texas A&M University and an elected Councilmember for the City of College Station.