Concerns about property values falling because of a proposed affordable housing project are legitimate, but only to a point, say local real estate professionals.
Residents in the area of 70 Arlington Dr. have expressed fear that a proposed 58-unit townhouse complex will drive down property values in their neighbourhood.
Because the property to be developed is now green space, putting any kind of building on it will decrease the value of properties that directly border the land, said real estate appraiser David Harrison.
"It's definitely going to detract from the value of those properties, those that are backing onto the development because they no longer have a green area. That argument is valid, but only for those," he said.
"The people across the street, they don't have an argument," Harrison said.
When real estate appraisers assess a property, they assign a premium to those that back onto a green space, likely in the range of about $20,000 to $30,000, Harrison said. That premium disappears if a building goes up in that green space.
The average assessed value of homes backing onto 70 Arlington Dr. is $346,000, putting the "green space premium" in the range of six to nine per cent of their value.
City council will hold a public hearing on Monday to consider a re-zoning application for the land, for which a sale is pending between St. Albert Protestant Schools and Habitat For Humanity Edmonton. Habitat plans to partner with private company Apollo Developments in building an affordable townhouse complex.
The proposal has angered area residents, prompting an array of concerns, including the quality of the development, density, traffic and property values.
When it comes to property values, arguments that the complex will bring down the value of properties that don't directly border it are "fallacious" and "sketchy," Harrison said.
"Yes they're townhouses, but they're new so that doesn't hurt an older neighbourhood," he said.
"That's one benefit of new development in an older neighbourhood. It tends to spruce things up and arguably wouldn't hurt the value at all."
Regardless of the neighbourhood, prospective homebuyers are very concerned about privacy and will pay a premium for backyards that overlook a ravine, park or green space, said real estate agent Jill Thomas.
"It's hard to put a number on it but it's very much something that's desirable," she said.
Thomas agreed that properties neighbouring the new development would see their values decrease. The extent of the decrease will be determined in large part by the finished look of the new building, she said.
Thomas doesn't believe that homebuyers are influenced by the general amount of multi-family development in a neighbourhood.
Cause and effect?
Some opponents to the Arlington Drive proposal have suggested Edmonton's Bergman neighbourhood is proof that affordable housing causes property values to fall. Habitat For Humanity has land in the northeast Edmonton neighbourhood that was re-zoned in April 2008 to allow for a 47-unit affordable housing complex.
Last January, when Edmonton announced that property values had fallen 10 per cent city-wide, Bergman led the way with a 22 per cent drop in assessed value.
However, the broader picture is that Bergman experienced a 90 per cent increase the year before and is within two percentage points of the city average over the last three years, said Rod Risling, assessment and taxation branch manager for the City of Edmonton.
"I always caution people [against] looking at one-year changes," Risling said. "When you look over a longer period of time, those changes seem to balance out."
