No, Large Apartment Buildings Won’t Devalue Your Home

In America, nothing can be said to be certain, except death, taxes, and apartments killing neighboring property values. Especially big ones that block sun and bring noise and traffic and transients who park on your street full of single family homes.

We’ve known this truth for almost a century now. The United States Supreme Court’s opinion in Village of Euclid v. Ambler Realty in 1926, a case regarding the legality of zoning, went out of its way to call out the effect apartments have on single family areas:

With particular reference to apartment houses, it is pointed out that the development of detached house sections is greatly retarded by the coming of apartment houses, which has sometimes resulted in destroying the entire section for private house purposes; that, in such sections, very often the apartment house is a mere parasite, constructed in order to take advantage of the open spaces and attractive surroundings created by the residential character of the district. Moreover, the coming of one apartment house is followed by others, interfering by their height and bulk with the free circulation of air and monopolizing the rays of the sun which otherwise would fall upon the smaller homes, and bringing, as their necessary accompaniments, the disturbing noises incident to increased traffic and business, and the occupation, by means of moving and parked automobiles, of larger portions of the streets, thus detracting from their safety and depriving children of the privilege of quiet and open spaces for play, enjoyed by those in more favored localities — until, finally, the residential character of the neighborhood and its desirability as a place of detached residences are utterly destroyed. Under these circumstances, apartment houses, which in a different environment would be not only entirely unobjectionable but highly desirable, come very near to being nuisances. [emphasis added]

While only 68 cities across the country had a zoning ordinance by 1926 despite the 1922 Standard Zoning Enabling Act, 1,246 cities adopted one by 1936 on the back of the SCOTUS decision. While protection from noxious industrial uses was clearly a component of support for zoning, the spread of apartments and other daily commercial uses, and the fear of resulting impacts to property values, also played a big part.

In modern America, our cities’ comprehensive plans, zoning codes, and even city-adopted small area plans are scattered with language like “protect single family homes,” and muddy words like “stabilize,” “compatible,” and “character” – all with the intent of buffering or separating single family areas from more intense uses. Some examples from the Twin Cities region:

Lakeville’s Comprehensive Plan:

General Residential Land Use and Housing Policies

5. Protect Lakeville’s single family neighborhoods from encroachment by higher intensity non-residential uses or medium and high density residential uses with adequate separation and buffering.

Minnetonka’s 2030 Comprehensive Guide Plan, Land Use

The unique character of Minnetonka’s existing neighborhoods will be preserved, however, opportunities to broaden housing choice will be sought on appropriate vacant or underdeveloped properties, compatible with adjacent development.
…
1-394 Regional Corridor
Establish and promote neighborhood stability through rational land use planning and the establishment of spacing/buffering requirements between land uses of different intensity.

Minneapolis’ Comprehensive Plan (sampled text)

TSAs call for tools that maximize potential community development benefits of transit while also strengthening and protecting the surrounding neighborhoods.

Encourage the development of medium- to high-density housing immediately adjacent to Activity Centers to serve as a transition to surrounding residential areas.

Finally, the Uptown Small Area Plan of Minneapolis

The Core Activity Center and Urban Village South Sub-Area are proposed to accommodate more intense and taller development in order to protect the neighborhoods and encourage more consistent development patterns in the neighborhood transition areas and edges.

The proposed building envelope balances the need for development capacity with the need to protect low rise neighborhoods.

So pervasive and accepted is the notion that we need transitions and buffers from areas of activity to protect, enhance, and stabilize single family neighborhoods that Form Based Codes, a favored tool of pro-compact growth among urbanists, almost always separate intensity in graduations away from pre-defined activity nodes:

What Does Research Tell Us?

The passages above and responses from the urbanist community are nice ways of saying what the 1926 case said. I’ve spent time with enough realtors over the last 8 years to know it’s a decently-held belief in the real estate business as well. But what does the research tell us? I’m going to cite more than a few studies, some of which are meta analyses of other studies, with relevant findings regarding property value impacts from dense development:

1. The Impact of Multifamily Development on Single Family Home Prices in the Greater Boston (2005)
   The trend in the index of the impact zone and the control area was compared in the years immediately preceding the permitting of the multifamily development and the years following completion of the development in order to determine if the multifamily development affected sales prices in the impact zone. In the four cases for which there was appropriate data, no negative effects in the impact zone were found.
2. Effects of Mixed-Income, Multi-Family Rental Housing Developments on Single-Family Housing Values (2005)
   The empirical analysis for each of the seven cases indicated that the sales price indexes for the impact areas move essentially identically with the price indexes of the control areas before, during, and after the introduction of a 40B development. We find that large, dense, multi-family rental developments made possible by chapter 40B do not negatively impact the sales price of nearby single-family homes.
3. Examining the Impact of Mixed Use/Mixed Income Housing Developments in the Richmond Region (2010)
   The home prices and assessments of nearby single-family homes were not adversely impacted by the presence of mixed income/mixed use developments. In fact, in many cases, the developments had a positive impact on those single-family neighborhoods.
4. The Property Value Impacts of Public Housing Projects in Low and Moderate Density Residential Neighborhoods (1984)
   From both statistical analyses it is clear that properties in Portland, Oregon, gain value after the location of public housing  proximate to them. … What is clear is that the value increase is quite small.
5. The Impact of Neighbors Who Use Section 8 Certificates on Property Values (1999)
   If only a few Section 8 sites were located within 500 feet, we found a strong positive impact on property values in higher‐valued, real‐appreciation, predominantly white census tracts. However, in low‐valued or moderately valued census tracts experiencing real declines in values since 1990, Section 8 sites and units located in high densities had a substantial adverse effect on prices within 2,000 feet, with the effect attenuated past 500 feet. Focus groups with homeowners revealed that the negative impact was based on the units’ imperfect correlation with badly managed and maintained properties.
6. The Effect of Group Homes on Neighborhood Property Values (2000)
   We attempt to replicate several previous studies, three of which found no evidence of neighborhood property values being affected by group homes. When testing these three models with our sample, we also found no evidence of group homes affecting property values.
7. Measuring the effects of mixed land uses on housing values (2004)
   We conclude from this research that housing prices increase with their proximity to—or with increasing amount of—public parks or neighborhood commercial land uses. We also find, however, that housing prices are higher in neighborhoods dominated by single-family residential land use, where non-residential land uses were evenly distributed, and where more service jobs are available. Finally, we find that housing prices tended to fall with proximity to multi-family residential units.

If you’re counting at home, 5 of those 7 studies found dense development, including affordable and market-rate, had negligible or positive effects on home values. One study found negative impact, and one of the studies found mixed impacts depending on the existing values of the neighborhood  public housing was added to. Heck, I even came across this study that says a landfill only reduced value for nearby properties by 3-7%. A landfill!

I’m sure there are more studies, and ones that show negative impacts from dense development. For the record, I went into the search in good faith and surfed pages upon pages of results on Google Scholar, with variations of the words “apartments,” “home values,” “negative impact,” “dense development,” in my searches.

Conclusions

Look, I’m not saying putting a 10-story safe house shading of someone’s beautiful sun room won’t diminish its value. In fact, that Portland study went on to say:

Gains in value, are, in fact, registered, but not equally among all nearby properties. Two separate functions can be seen to pertain: a disamenity function which is most intense at the site of public housing, and a neighborhood amenity constant which is added to all nearby properties.

It’s probably true that the properties immediately abutting a six-story apartment lose value most of the time, even if new residents or the new building itself brings an amenity to the neighborhood and raises aggregate values. Zoning and small area plans as we’ve conceived them are basically a prisoner’s dilemma response to this reality.

But homeowners forget how complicated and varied a purchase decision is. Whether a 6-story building is blocking views, diminishing privacy, etc are but small deciding factors to be weighed against things like a home’s size, finish quality, yard, garage size, proximity to jobs/shopping/natural amenities/transit, and on. It’s why people are willing to pay $3,000 a month to rent out tiny apartments with no view in Manhattan or San Francisco, or why someone would pay $300,000 for a 1,400 square foot home in South Minneapolis when one double the size could be bought for half the price in Elko.

So my question to everyone is: what are these transition zones and buffers protecting? What are the actual social goods to concentrating development in small pods or thin corridors that represent a tiny fraction of the city’s overall land rather than being more flexible? Should we let people in apartments live on the quiet side-streets single family dwellers desire even if the scale isn’t “compatible” with its neighbor? What do compatible and stabilize even mean? Just because we have the legal power to zone our city this way doesn’t mean we should. Especially when underlying concept supporting this separation may not even be true in the first place.