The most common example of open space is a city park. Photo Source: Flickr user Cathy McCray.
What is the value of green space? You probably know the answer to this question. If you said green space provides benefits to public health, you’re absolutely right. If you said green space improves drinking water quality, you’re right too. However, green space has monetary benefits as well. What is the value of green space to the homeowner that lives next door? That is a question researchers have studied for decades and their answers have been largely positive. That is, if you live near a city park or a state forest, holding all else constant, your house is worth more money than if you lived miles from that same city park or state forest.
But, why should property owners care about the increased land value proximate to open space if their land is distant? Why should planners preserve open space when not everyone in the community benefits and the preservation of open space can be expensive? One answer is that greater property values mean higher taxable values of land and a larger tax base for the municipality [1]. This means that more tax dollars can be spent on other initiatives and services. However, planners should carefully design open space because not all open space is the same. If done improperly, open space may depress the value of proximate properties.
How can researchers isolate the variable of the distance to the city park or state forest to know that the proximity to these public spaces is the only thing that changed a house’s value? One can’t compare two identical houses to each other, one near a public space and one far from the same public space. Those two houses don’t exist. But researchers can use a hedonic model approach. The hedonic model is a mathematical algorithm that models an item’s total price as the sum of the price of each attribute of that item.[2] In essence, the hedonic model that researchers use to study the effect of proximity to green and open space controls for every characteristic of a property that can vary. This allows researchers to isolate distance to green space as the only variable that affects the value of property and assess the market change of properties as a result.
The results have largely been positive. But the variables that researchers have accounted for have expanded, and many of these added variables have been shown to be very important to the overall conclusion. Notable variables include the overall quality of the open space itself and the existence or perception of existing elevated crime levels associated with the open space.
Seong-Hoon Cho and his team at the University of Tennessee, Knoxville noticed that the existing hedonic models used to study the change in property value associated with the proximity to open space included variables to control for characteristics of the property, but not of the open space itself. They found that property values in Knoxville, Tennessee generally increased with proximity to green and open space. However, not all open space had the same effect and some even detracted from the value of the property. For example, properties with a view of a clear-cut section of forest at the time of purchase were worth less, all else held constant. Additionally, Cho and his team found that homogenous tree species composition is valued more highly than diversity and that evergreens are valued more highly than deciduous trees.
Clear cut open space reduces proximate property values. Photo source: Flickr user Jess Sloss.
Moreover, Austin Troy and a team at the University of Colorado Denver found that city parks in Baltimore with crime rates 4 times or more of the national average depressed the property values of proximate properties within the city.[3] Thus, planners should plan open spaces in high-crime areas more carefully as they can help bring crime rates down if their design is right.
In conclusion, open space in a community can benefit everyone, including residents that never use the open space and non-landowners in rental properties near or far from open space. However, planners should take a cautious approach to designing green and open space so that the construction of a city park doesn’t have a negative effect on neighboring property values and depress a city’s tax base.
[1] Nicholls, S., & Crompton, J. L. (2005). The Impact of Greenways on Property Values: Evidence from Austin, Texas. Journal of Leisure Research, 37(3), 321–341.
[2] Xiao, Y. (2017). Urban Morphology and Housing Market. https://doi.org/10.1007/978-981-10-2762-8
[3] Troy, A., & Grove, J. M. (2008). Property values, parks, and crime: A hedonic analysis in Baltimore, MD. Landscape and Urban Planning, 87(3), 233–245.
About the Author: Evan Kirk is a first year Master’s student in Land Use and Environmental Planning. He is a research assistant for the Environmental Finance Center working with utility rate surveys and the Jordan Lake Nutrient Management Study. He spends his free time playing pickup basketball, planning his next weekend hike, and watching college sports.
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