Higher-Density Development: Myth and Fact

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1 September 2013 RE: Sendik s Towne Centre Multifamily Residential Development s Impact on Surrounding Property Values In response to requests, we are pleased to provide the following information on the impact of multifamily residential developments on the value of nearby single-family homes. In summary, decades of research reveal that market rate multifamily developments have no negative long term impacts on the value of nearby singlefamily homes. The following are excerpts from research conducted via the Milwaukee Public Library s Business, Technology, and Periodicals Research Desk and their vast repository of professional research databases such as EBSCOhost, which has full-text scholarly articles, reports, and media articles of over 1,700 periodicals, 500 reference books, and over 164,400 primary source documents dating from 1975 to today. For full texts please contact Anna-Marie Opgenorth, Community Outreach and Development Associate at amopgenorth@mandelgroup.com. A selected bibliography citing resources exploring the various impacts of multifamily developments on communities follows. Higher-Density Development: Myth and Fact Urban Land Institute / Harvard University s Joint Center for Housing Studies / Virginia Tech. Richard M. Haughey, No discernible difference exists in the appreciation rate of properties located near higher-density development and those that are not. [...] Several studies have examined whether multifamily housing has any impact on the value of nearby single-family detached houses. These studies have shown either no impact or even a slightly positive impact on appreciation rates. [ ] a long-term study by Harvard University s Joint Center for Housing Studies published in 2003 also confirms that apartments pose no threat to nearby single-family house values, based on U.S. Census data from 1970 to Not only is there compelling evidence that increased density does not hurt property values of nearby neighbors: researchers at Virginia Tech University have concluded that over the long run, well-placed market-rate apartments with attractive design and landscaping actually increases the overall value of detached houses nearby. They cite three possible reasons. First, the new apartments could themselves be an indicator that an area s economy is vibrant and growing. Second, multifamily housing may increase the pool of potential future homebuyers, creating more possible buyers for existing owners when they decide to sell their houses. Third, new multifamily housing, particularly as part of mixed-use development, often makes an area more attractive than nearby communities that have fewer housing and retail choices.

2 Effects of Mixed-Income, Multi-Family Rental Housing Developments on Single Family Housing Values MIT Center for Real Estate. Henry Pollakowski, David Ritchay, Zoe Weinrobe, the results in all seven case study towns lead us to conclude that the introduction of large-scale, high-density mixed-income rental developments in single-family neighborhoods does not affect the value of surrounding homes. The fear of potential asset-value loss among suburban homeowners is misplaced. Source: NAHB computations based on data in the American Housing Survey: 1997 and 1999 (Washington, D.C.: U.S. Bureau of the Census and U.S. Department of Housing and Urban Development, 1997 and 1999). The Case for Multifamily Housing Urban Land Institute. Richard Haughey There is no evidence that multifamily communities devalue nearby single-family homes. Apartment and condominium construction often is the sign of a thriving local economy that supports a variety of jobs and housing types. Thriving economies also tend to be associated with appreciating home values. The American Housing Survey, conducted every two years by the U.S. Bureau of the Census and the U.S. Department of Housing and Urban Development, reports that there is no discernible difference in price appreciation of single-family housing located near multifamily buildings compared with homes not close to multifamily.

3 Recent Studies Reinforce that Apartments are Good for a Community National Multi Housing Council and National Apartment Association White Paper, Concerns that multifamily rental housing will lower the value of their single-family houses has driven many residents to oppose new apartment developments in or near their neighborhoods. [ ] even market rate rental housing can give rise to arguments that apartments lower property values and damage the community s reputation. The fear that housing density will hurt property values seems to be primarily based on anecdotes. By contrast, most research has come to a different conclusion. Multifamily Market Outlook National Association of Home Builders locating apartments adjacent to single-family neighborhoods does not have a negative effect on house appreciation. Between 1997 and 2005, single-family detached homes located within 300 feet of multifamily structures appreciated at a slightly higher rate than homes that were not near multifamily building [ ] a good mix of rental housing in a neighborhood helps to create a stable market for home sales. Further, academic studies have shown that many of the perceived differences between owners and renters are virtually nonexistent when adjusted for factors such as family size and demographics. In fact, research based on the University of Chicago s General Social Survey demonstrates that apartment residents are more socially engaged than homeowners and equally involved in community and religious organizations.

4 Apartments Integral for Long-Term Development Strategies National Real Estate Investor. Gary Kachadurian, Jonathan Kemper But progressive communities have seen that a modern apartment community, through environmental planning and exterior landscaping, is fully compatible with surrounding single-family neighborhoods. Between 1987 and 1995, single-family detached dwellings located near multifamily communities (within 300 ft.) appreciated at nearly the same rate as those not near an apartment property, 3.12% compared to 3.19%. Apartments are integral for long-term development strategies.

5 Selected Research Bibliography Belden Russonello Strategists LLC. (March 2013) Americans Views on their Communities, Housing, and Transportation: Analysis of a national survey of 1,202 adults. The Urban Land Institute. Belsky, Eric; Bratt, Rachel; DeNormandie, James; von Hoffman, Alexander. America s Working Communities and the Impact of Multifamily Housing. Harvard University. Joint Center for Housing Studies Handy, Susan; Sallis, James; Weber, Deanne; Maibach, Ed; and Hollander, Marla; Is Support for Traditionally Designed Communities Growing? Evidence From Two National Surveys. Journal of the American Planning Association, Vol. 74, No. 2, Spring 2008 Haughey, Richard M. The Case for Multifamily Housing, Second Edition. Washington, D.C.: ULI the Urban Land Institute, Haughey, Richard M. Higher-Density Development: Myth and Fact. Washington, D.C.: ULI the Urban Land Institute, Kachadurian, Gary; Kempner, Jonathan. Apartments integral for long-term development strategies. National Real Estate Investor. May 1999, Vol. 41. (Issue 6), p34. Lang, Robert E., Blakely, Edward J., and Gougb, Megban Z. Keys to the New Metropolis: America s Big, Fast-Growing, Suburban Counties. Journal of the American Planning Association, Vol. 71, No. 4, Autumn Lee, Hyun-Jeong. Influence of Lifestyle on Housing Preferences of Multifamily Housing Resident. Virginia Polytechnic Institute and State University, Department of Apparel, Housing, and Resource Management NMHC Research Refuting NIMBY Myths Should Help Developers Obtain Approvals. Multi- Housing News. Oct2003, Vol. 38 (Issue 10), p4. Obrinsky, Mark; Stein, Debra. Overcoming Opposition to Multifamily Rental Housing. White Paper for the National Multi Housing Council Pollakowski, Henry; Ritchay, David; Weinrobe, Zoe; Effects of Mixed-Income, Multi-Family Rental Housing Developments on Single-Family Housing Values. MIT Center for Real Estate: Housing Affordability Initiative. April 2005 Reed, Dan. More homebuyers want walkable, transit-served communities. - Greater Washington, greatergreaterwashington.org, Web, 9/10/13. Schumaker, D. NAR Field Guide. NATIONAL ASSOCIATION OF REALTORS, realtor.org Web. March Schuur, Arah. The Impact of Multifamily Development on Single Family Home Prices in the Greater Boston Area. Center for Real Estate and the Department of Urban Studies and Planning. Massachusetts Institute of Technology Varady, David P. Influences on the city-suburban choice Journal of the American Planning Association. Winter90, Vol. 56 (Issue 1), p22