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Weekly UpdatesABSTRACT
In this study, over 1,200 home sales in 1998-2007 are aggregated into four study areas with a 345-kV transmission line. Field data are collected on the sale properties relative to proximity to and visibility of transmission line towers, and the extent of encumbrance by a transmission line easement. A multiple regression model is used to test whether the sale prices are affected by line proximity, tower visibility, or property encumbrance. In both continuous distance and distance zone models. the proximity and visibility variables typically fall to be statistically significant. The only variable that appears to have any systematic effect is the encumbrance variable; however, its magnitude is generally small.
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There will be a significant expansion of the 345-kV transmission grid in New England over the next decade; this has raised issues on the potential effects of transmission lines on the value of nearby properties. (1) As will be reviewed briefly, the professional literature on the impact of high-voltage transmission lines (HVTLs) on residential real estate values is extensive. While the literature creates a relevant foundation for addressing the potential effects of new 345-kV transmission lines on property values, the current research is designed to investigate three outstanding issues.
First, most of the literature is somewhat dated. Of the most important studies (those that examined large numbers of sales using statistical procedures), only one study analyzes data from a period subsequent to 2000. (2) Since attitudes, behaviors, and their reflection in the market can change over time, it is important to have contemporary evidence on the question of possible property value effects.
Second, the construction that motivates this study is specific to 345-kV lines (which are mostly on 130-foot steel poles), while the historical research has no such focus and only occasionally has dealt with this corridor configuration.
Third, a careful analysis has to look at the interaction of three interrelated variables-proximity, visibility, and the extent to which an adjoining property is actually encumbered by the transmission line right-of-way easement. Since proximity and encumbrance are highly correlated, the effects of one could be attributed to the other if both are not adequately accounted for. Similarly, the effects of visibility and proximity must be considered in tandem if the effect of each is to be properly measured.
In the course of this research, three additional questions were investigated: (1) are higher-valued properties more vulnerable to HVTL effects than lower-valued properties? (2) are properties in general more vulnerable to HVTL effects in a down housing market? and (3) since much of the proposed expansion of the grid will take place in existing utility corridors, how can the incremental effect of these expansions be measured?
Summary of the Literature
Methodology
Reliable evidence of the effect of HVTLs on the value of adjacent or nearby residential property must rely on actual, arm's-length sales of property that lie in close proximity to an existing line. These sales are then compared to other selected transactions involving properties located outside of the potential area of influence. (3) The three most common approaches for performing this comparison are paired data analysis, retrospective appraisal, and multiple regression analysis.
Paired Data Analysis. The paired data approach attempts to match the characteristics of a subject property sold within a claimed area of impact (the subject area) with individual sales of similar properties sold outside the claimed area of impact (the control area). The issues here center on the availability of sales and the ability to identify sales that can be considered a match to the subject property. (4)
Retrospective Appraisal Based on Control Properties. The retrospective appraisal approach recognizes that a perfect match is unlikely and relies on standard residential appraisal sales comparison methodology. A subject property is selected that has been sold, and it is then appraised retrospectively, i.e., at the date of its historical sale. The appraised value based on control area comparables can then be compared to the actual sale price to see if the HVTL had any effect on the sale price of the subject property. This is obviously an improvement over the paired data analysis, but still suffers from the fact that, as discussed later, the effects under investigation are likely to be small, and may well be within the error range of standard appraisal methodology.
Multiple Regression Analysis of Large Numbers of Subject and Control Area Sales. The third approach, multiple regression analysis, uses statistical tools to try to isolate the effects of the HVTL from all of the other determinants of value. This is only possible with a relatively large number of subject area and control area sales. If the sales, property, and neighborhood data exist to carry out this approach, it is ideally suited to identifying the independent effect of the transmission line, holding the other value-determining factors constant. (5) In addition, it is the least subjective of the three potential approaches and is the only approach to give explicit measures of reliability, which helps the user determine what weight to give the results.
Conclusions from the Literature
While the literature on the effect of HVTLs on property values is extensive, it is of uneven quality, ranging from anecdotal reports to large, rigorously conducted statistical studies. Several hundred articles were reviewed as part of the current study, and thirty-eight had direct relevance to either the methodological or empirical questions at issue here. These are referenced in footnotes or in the Additional Reading section at the end of this article.
Over the past twenty-five years, the literature has increasingly recognized multiple regression analysis as the most reliable technique to investigate whether HVTLs impact property values and, if so, to quantify the effect. As mentioned, multiple regression has the significant advantage of not relying on the subjective judgment of the appraiser. Rather, it represents an objective reflection of the data together with measures of reliability that attach to the results. A large number of studies have been undertaken since the 1980s using large databases and statistical tools to investigate the effect of transmission lines on property values. Sixteen of these studies form the core of the professional literature and are widely quoted and cross-referenced one to the other. (6) The results of these studies can be generally summarized as follows:
* Over time, there is a consistent pattern with about half of the studies finding negative property value effects and half finding none.
* When effects have been found, they tend to be small; almost always less than 10% and usually in the range of 3%-6%.
* Where effects are found, they decay rapidly as distance to the lines increases and usually disappear at about 200 feet to 300 feet (61 meters to 91 meters).
* Two studies investigating the behavior of the effect over time find that, where there are effects, they tended to dissipate over time.
* There does not appear to have been any change in the reaction of markets to high-voltage transmission line proximity after the results of two widely publicized Swedish health-effects studies were preliminarily released in 1992. (7)
These general conclusions have characterized the appraisal and economic literature throughout the last twenty-five years, and there do not appear to be any new or different trends in the research. It is during this period that most of the medical studies on electromagnetic field (EMF) exposure were published, including the oft-referenced Swedish studies. One of the questions, therefore, is the apparent inconsistency between these statistical results and the intensity of opposition that new transmission line corridors generate. How can it be that if people are so intensely adverse to HVTLs, we do not see more of a market effect? This inconsistency is seen clearly when residents along existing HVTLs are interviewed.
The basic thrust of survey questioning is whether home purchasers were aware of the transmission lines prior to their purchases and, if so, whether their purchase decisions or the prices they paid were affected by the lines. (8) Like the statistical analyses of sales, the results of these survey studies are quite consistent with one another. Their findings can be summarized as follows:
* A high proportion of the residents were aware of the lines at the time of purchase.
* Between one-half and three-fourths of the respondents have negative feelings about the lines.
* The negative feelings center on fear of health effects, aesthetics, and property-value effects.
* Of those who have negative feelings about the lines, the vast majority (67%-80%) report that the purchase decision and the price they offered to pay were not affected by the lines.
In summary, the relatively small effects on property value attributed to HVTL proximity in the literature does not mean that the direction of the effect of transmission lines on property values is not negative. The general interpretation is that, even though transmission line issues have been a prominent concern in most of the communities studied, and even though the direction of effect on real estate value is generally negative, the presence of transmission lines is apparently not given sufficient weight by buyers and sellers of real estate to have had any consistent, material effect on property values.
Connecticut and Massachusetts 2008 Case Study
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