Nuke plants? Haven't got that far yet. I'm still sitting here bugging-out over the guy that paid $1,300,000 for his new home on a "premium" cul-de-sac lot with a 26" and a 30" high-pressure gas line easement running down the side of the site. Lot premium paid was $200,000-after all, the gas line was in some very cute looking wetlands with cattails growing there. Every home along the easement was similar-priced and under construction or settled.
Then there's the one I did today-new home for $249,000 on a cul-de-sac backing to the NJ Turnpike with the high pressure gas line easement across the rear of the site. Lot premium paid was $5,000.
Where's the external obsolescence???? Got me. The noise and the boom factor doesn't seem to bother buyers out here. They're happy if they can just find something to buy.
Hmm.... think we can extrapolate that info to obtain a lot premium for living close to a nuke plant? Hell, Ray Ohler will tell you that it sure don't scare the yuppies to live next to/near the Limerick nuke plant in PA in their $300,000 to $400,000 homes. Of course, I haven't been appraising in PA for over 1 year so those homes maybe 500K by now..........who knows
High Pressure Gas lines, that'll do it, gots ta be equal - they all go boom and ya disappear right :lol: hell if they're buyin em in NJ they'll do it every time hear in CT, hey maybe it's your people from NJ that are buyin em 8O :? :wink:
Three Mile Island. After the leak, property values declined. It was measurable. But, interestingly, and not many remember this, those values recovered very quickly- to the extent that the prevailing values only 3 years afterward had caught up with the rest of the market.
There are a lot of misconceptions out there. Our job is to deal with the facts. If you can measure the impact, then by all means adjust for it. If not, do not stick your neck out. You simply tell the client about the proximity, that it does not appear to be measurable (if that is true) and get on with life.
Another misconception is the proximity of public housing. Many automaticlly assume it has a negative impact on surrounding SFRs. But Mike Marous, MAI in Park Ridge, IL did an academic study on this some 5-7 years ago. His data indicated absolutely no impact.
Now neither of these are necessarily universal. It may not be the case in each micro market. But absent any proof of negative impact, I'd shy away from anything more than reporting what is in the market area and be done with it.
Agree with Brad on this one. Be careful you don't impose your prejudices. have found similar effects with high tension power lines. Whenever I appraise something that backs up to a gas line, power line, highway etc...I always ask the homeowner how they look at it. The power line is good example. Most people look at it in a positive manner for 2 main reasons: more privacy and more land for a garden etc.. Even did one where they guy built a small fairway with a green so he could practice! Looked just like a one hole golf course. The times I have found a negative effect were with a tower close by.
I live within a few miles of Three Mile Island, and although I don't work in the residential market, I have not seen or heard anything in the local press or from local real estate outlets that the market has been adversely impacted by 9/11. As far as the accident at TMI in 1979, an appraiser in Harrisburg published a study as to its effects on real estate values. His name is Don Paul Shearer.
A few weeks after 9/11 one evening I heard the unmistakable sound of fighter jets from within our closed house. I ran outside and saw two low-flying fighters making a huge circle and crossed right over our house (which they continued for a few hours). I thought something must have happened at TMI and sure enough there was some kind of threat and these fighters were scrambled. Rather unnerving as you can imagine.
In the commercial business, there may be some impact on skyscrapers as tenants may be less interested in locating there. I heard the Empire State Building is having occupancy troubles. Further, commercial insurance rates have risen, which has an obvious effect.
Paul: You mentioned insurance premiums in your above post. I did a commercial appraisal for a large commercial developer about six months ago and they told me their insurance premium on all of the property they owned was going from $330,000 to $1.5 million and they were still negotiating. With a cap rate of 10%, that will cost them around $12,000,000. None of the property is near a high risk area. When you have expense increases like this, interest rates making 2 to 4% jumps, equity rates going throught the floor, etc., it makes one wonder. What I have been doing in the income approach is using a wide range of NOI's and a wide range of cap rates and graphing the results then drawing a circle around the most likely price range under any forseeable circumstances and saying the price is somewhere inside that circle but God only knows where as of this moment.
I agree, there is a lot of uncertainty. I think in the back of many people's minds, they are waiting for the next domestic terrorist attack and wondering about our move against Iraq. I wonder about the spike in insurance premiums. Will they ever come back down, and if so, then the spike only has a temporary adverse impact on cash flow? However, given the nature of insurance companies and their aversion to reducing rates, I doubt if that will happen. Add to the mix the flow of money out of the stock market and into real estate, and there is quite a cloud over the old crystal ball. I've seen clear market support in recent months for accelerated appreciation in small investment properties. But is this a real estate "bubble"? Greenspan recently denied such a bubble exists, but I think he was refering to residential single-family. Interesting times we live in....
I agree with Brad and Paul. I too lived near the Three Mile Island Facility. It seemed that more people away from the area were concerned than the ones who were local. The press made a "big thing" about it, but that was the national press. I too, did a study and found the same results as those posted by Brad. Three years after the incident, there was no appreciable difference in values within 1 mile of the Island as opposed to those in Elizabethtown, 5 - 7 miles away.
I also agree with JimBob. The press imposed their prejudices, but we as appraisers must avoid that trap. What is the market doing? In the case of TMI - nothing.
I believe that the stock market downturn has sent a lot of folks scrambling to alternate investments.
At the bank, we are seeing a big increase in financing for purchases of 2-4 unit properties. I do not have empirical data, but I am assuming that these $3-400K properties seem a safe alternative to the fluctuations in the stock market.