How Much Do Power Lines Lower Real Estate Value?

The view could be better.

The view could be better.

Power lines aren't the prettiest things to look at. Plus, there's a long-running debate over whether radiation from high-voltage transmission lines is a health hazard. With that in mind, you'd assume property values near power lines would suffer. But not only have researchers had trouble nailing down how much power lines lower real estate value, they've found that it's not actually clear whether they hurt values at all.

Factors

A 2010 paper in the "Journal of Real Estate Literature" reviewed six decades' worth of research on the effects of power lines on property values. The authors of that paper identified three major ways in which people believe power lines affect property values. First, power lines are just really, really ugly. Second, power lines generate electromagnetic radiation that some people believe causes cancer. (The science on this may be inconclusive, but the fear is real.) Third, people whose property sits directly under transmission lines are generally subject to restrictions on how they can use their land. For example, they can't plant trees that might someday tangle up the lines.

Effects

The authors of the 2010 paper looked at more than a dozen studies conducted between 1948 and 2009. Most of the studies actually found that power lines had no measurable effect on property values, as determined by the sale price of homes. Those that did find a correlation between power lines and reduced property values put the reduction at about 2 percent to 9 percent. For a house that "should" sell for $250,000, for example, that would translate to a price reduction of $5,000 to $22,500. As the authors note, these studies found a correlation, but not necessarily a cause-and-effect relationship. Homes near power lines sold for less, but that's not the same as saying there's conclusive evidence that the power lines were responsible for the lower price.

Mitigating Factors

The studies that found a link between power lines and property values also found that the effect gets smaller over time. In a brand-new neighborhood in which power lines may be the most prominent feature -- and in which there are more homes for sale -- potential buyers look at the wires and say, "No way I'm going to live by those. I'll take that house over by the pond." But as the neighborhood ages, the trees get taller and the homes fill up. Someone who wants to live in that neighborhood may have no choice but to buy that house by the power lines, so the price effect gets reduced or disappears completely. A few of the studies in the 2010 review even suggested that homes closer to power lines sold at a premium because those lots tended to be larger.

Perception vs. Reality

Research on the issue generally shows that if you ask property appraisers and real estate agents whether power lines hurt property values, they'll nod their heads vigorously and say darn right they do. A 1992 survey of appraisers, for example, found that 84 percent agreed that the wires lower property values, primarily because they're so ugly, and the average estimate of that effect was a 10 percent reduction in value. Surveys of residents near high-voltage transmission wires found that most agree that, yes, they're definitely ugly. But that's perception. Reality is what homes actually sell for, and as discussed, the evidence of an effect is not as strong as the belief in the effect.

 

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