Home buyers consider many variables, some highly subjective, when making purchasing decisions. Key factors that influence property values include market trends; proximity to schools, parks, churches and other amenities; road and air transportation availability; and neighborhood conditions. Quality, age, condition, size and design of homes and buildings are additional factors. Factors that may be important and valuable to one buyer may be considered a drawback by others. Examples are swimming pools, proximity to an interstate highway, railroad, dairy farm or elementary school. And market forces, such as a buyer’s market, seller’s market and the length of time a property has been listed also impact a sales price. A percentage of the purchasing market will refuse to purchase properties near transmission lines in the same way that a percentage of the market refuses to purchase homes next to a school, with a swimming pool or a single bathroom. For another segment of the purchasing market, the proximity of a power line is not compelling and is only one of many factors that will influence the purchasing decision.
Over time, transmission lines become part of the typical landscape, along with distribution lines, cell towers and windmills. ATC owns and operates more than 9,440 miles of transmission lines, many of which have been in place for decades. Transmission lines today exist in residential areas, commercial and industrial parks, natural and recreation areas, agricultural land and urban centers. Lower-voltage distribution lines are even more prevalent. While proposals for new transmission lines generate concern, power lines are not fundamentally new infrastructure. Other characteristics, including neighborhood, lot and home features play a more significant role in determining the value of a property.
Generally speaking, peer-reviewed, published studies confirm that property values are derived from many factors, and that the presence of a transmission line plays a minor role in determining property values. These scientific studies (including multiple regression analysis of thousands of sales) and literature reviews of such studies find that transmission lines have little effect on most property values.
For more information, click on the following links to learn more about these studies.
Jackson, Thomas O. and Jennifer Pitts, “The Effects of Electric Transmission Lines on Property Values: A Literature Review,” Journal of Real Estate Literature, 2010, Vo. 18, No. 2.
Chalmers, James A. and Frank A. Voorvaart, “High-Voltage Transmission Lines: Proximity, Visibility, and Encumbrance Effects,” The Appraisal Journal, Summer 2009.
Pitts, Jennifer M. and Thomas O. Jackson, “Power Lines and Property Values Revisited,” The Appraisal Journal, Fall 2007.
The peer-reviewed research concludes, not surprisingly, that property values are derived primarily from factors such as location, physical features of the land, improvements and many of the considerations outlined above. When studies do find a price differential, the effect of a transmission line is generally in the range of 3 to 6 percent, the impact decreases as distance from the line increases, and the impact usually disappears beyond 200 or 300 feet from the line. The impact also decreases over time, suggesting that the market may react to change more than to the transmission line itself.
The research findings that transmission lines have little or modest effect on property values has remained constant for decades, despite shifts in public concerns or increased construction activity.
Some appraisers disagree and point to other studies that show power lines have a negative effect on property values.
As in any field of research, junk science that overstates the effect of transmission lines on property values can be found. It is important to find and rely on peer-reviewed, published research, and to approach “studies” that have not been submitted for peer-review and publication with skepticism. “Studies” using small samples or a single sale are not predictive of market behavior.
There is also a difference between empirical research and opinion-survey research. Surveys of individuals’ perceptions of an issue often don’t match up to the realities of the marketplace. Research has shown that there is a measureable difference between an individual’s “stated preferences” and “revealed preferences.” The former asks respondents to anticipate what they might do in a hypothetical situation; the revealed preferences measure actions – in the case of property value research, actual market sales. The stated preference survey might ask the respondent to compare identical properties, one with a transmission line and the other without, but in reality, no two properties are identical. Such surveys don’t reflect actual market behavior.
“Utility” is the use of the property for its intended purpose. A vacant parcel of land that is not subject to any easements may be used by the owner for many purposes, including structures and trees. An easement on the property restricts what is permitted in the easement area, including dwellings and tall-growing trees. Such restrictions are referred to as a “loss of utility” and pertain to the portion of the property that is subject to the easement. Consequently, small parcels may experience a greater loss of utility than larger parcels. If an easement divides a small parcel in half, loss of utility also may extend to either side of the parcel if it becomes too small to support construction. We seek to minimize the loss of utility by locating power lines along existing roads, railroads, pipelines, power lines, and property lines.