Staff Paper 363                                              June 2003

The Impact of Open Space and Potential Local Disamenities
on Residential Property Values in Berks County, Pennsylvania

Richard Ready and Charles Abdalla
Department of Agricultural Economics and Rural Sociology
The Pennsylvania State University
University Park, PA 16802

Staff Papers are circulated without formal review by the Department of Agricultural Economics and Rural Sociology.  Content is the sole responsibility of the authors.

Executive Summary

This research project estimated the impact that surrounding land use and potential local disamenities have on residential property values in Berks County, Pennsylvania.  An implicit house price function was estimated based on 8,090 single family houses sold between 1998 and 2002, using regression analysis.  Information on surrounding land use, proximity to potential local disamenities, and structural attributes of the houses were used to explain variation in house prices.

Within 400 meters of the house, the land use that has the most positive impact on house price was open space, followed by large-lot single family residential land.  Commercial, small-lot single family residential, and multi-unit residential were less desirable.  The least desirable land use within 400 meters of the house was industrial.  Also, open space on parcels that are covered by conservation easements, including agricultural conservation easements, has a less-positive amenity impact than open space not covered by such easements.  This does not necessarily mean that easements cause nearby property values to decrease.  It may be that farms with agricultural conservation easements tend to be managed more intensively, which may be seen as less attractive by nearby homeowners.

Between 400 and 1600 meters away from the house, the land use with the most positive amenity impact on house price was commercial, followed closely by large-lot single family residential.  Of open space uses, only land that is owned by Local, State or Federal Government and land that is covered by conservation easements have a statistically significant positive amenity value. 

Several potential local disamenities were found to have a negative impact on nearby house prices.  Of the potential local disamenities investigated, the impact of landfills on house price was largest, and extended the farthest (up to 3200 meters).  A landfill located 800 meters from a house decreases that house’s sale price by an estimated 6.9%.  The impact of a large-scale animal production facility (over 200 animal equivalent units or aeu’s) on house price was about one half to two thirds as large as that from a landfill (4.1% at 800 meters), and did not extend as far (up to 1600 meters).  The impacts on house price from mushroom production and from the regional airport were much less (0.4% and 0.2%, respectively, at 800 meters).  The impact from high-traffic roads was small, and extended only a short distance.  No significant impact was found for sewage treatment plants.

Additional analysis attempted to investigate whether different types of animal production facilities had different impact on nearby house prices.  Differences in the impact due to differences in the size of the operation (number of aeu’s) were not statistically significant.   Further, medium-sized production facilities (200 to 300 aeu’s) were found to have a statistically significant negative effect on house prices when considered apart from larger facilities.  Similarly, the impact did not vary significantly by species (poultry, swine, and beef/dairy).  An analysis of proximity of animal production facilities and residential properties showed that the density of single family homes around animal production facilities was lower than the average for rural parts of the county.  An implication is that some potential for conflicts is avoided due to the way in which these land uses are located on the land. 

The total impact on surrounding house prices was calculated for a landfill, the regional airport, and an animal production facility.  The average impact on the value of 3342 houses located within 3200 meters was $2442 (all values are in 2002 dollars).  The total impact on all houses was $8,162,000, which is 2.6% of the assessed value of the affected properties.  The average impact of the regional airport on 2256 houses located within 1600 meters of the airport runway and its flight paths was $104, and the total impact on the value of these properties was $235,000, or 0.1% of the assessed value of the affected properties.  This calculation does not include 2391 properties located near the airport within the City of Reading.  The average impact of a single animal production facility on 119 single family residences located within 1600 meters of the facility $1,803.  The total impact on all 119 houses is $215,000, or 1.7% of the assessed value of the affected houses.  These figures are intended as illustrations, and should not be considered averages for similar facilities.  The impact from any given landfill, airport, or animal production facility will depend on the number of houses located near the site, and on the market value of those houses absent the facility. 

The study area chosen, Berks County, was well suited to this type of analysis, in terms of data availability and the diversity and dispersed spatial pattern of land uses and agricultural production.  The research method should be extended to more study areas, to see if differences in population density, demographics, or type and amount of open space and agricultural production influence the results.  Until more research is conducted in more counties, care should be taken in extrapolating the results from this research to other regions.