“Wind turbines definitely lower local property values. The only question is, how much?”

Feb 12, 2014

Facebooktwittergoogle_plusmail

balloon

Carl V Phillips PhD, Guest Editor

Large wind generators (IWTs, for “industrial wind turbines”) cause health problems for nearby residents, kill birds, and destabilize the power grid. Something those impacts have in common is that it would be possible for them to not be the case, and so attempts to deny them represent merely a refusal to acknowledge the overwhelming empirical evidence. That “merely” contrasts with another impact, IWTs lowering local residential property values. Denial of that not only requires ignoring the specific empirical evidence, but requires a suspension of well-established principles of economics.

The value of a piece of real estate is what someone is willing to pay for it. More specifically, in a theoretical perfect market, it is what the person (or family or other entity) who values it second-most would pay for it. This is because whoever values it first-most would have to pay $1 more than that value in order to win the bidding for it. Anything that would cause that person in the second-most position to value the property less, therefore, lowers its value.

Many people are aware of the potential health effects of nearby IWTs, and thus will value a property enormously less if it is near IWTs. For many others, the audible noise or visual impact would lower the value somewhat. If the person who values a property second-most falls into either of these groups, the value of the property will be lower. There is no reason to believe that anyone prefers to have a nearby IWT, so there is no chance that person would like the property more and thus increase the value. (Note that this analysis does not consider the net change in the value of a property with income from IWTs that are actually on the property. For such properties there will still be a decrease in value from the proximity but might be a net increase because the income more than makes up for this.)

Moreover, even someone who does not personally worry about the health risk or find the aesthetic impacts objectionable will know that others do. Thus, he will know that the potential resale value of the property is lower, and since that contributes to the value, this will tend to push down the value for even those who do not mind living near the IWTs.

Thus, there is simply no question that IWTs lower the value of nearby property, and the only legitimate question is “how much?”, not “does it occur?” Anyone who insists that there is no reduction in value is trafficking in nonsense that is actually one step worse than the nonsense that there are no health impacts, in that it denies both the evidence and the irrefutable logic.

Of course, in reality markets do not function exactly like the theoretical simplification, but the same principle applies in the real world with only a bit of additional complication. The sale of a property does not attract the attention of everyone who might want to bid, and so the second-highest valuation is not based on every possible buyer, but only on those who are in the market at the particular time. But this changes nothing. More significantly, the market is not a perfect auction, so the highest offer (which determines the market value of the property) does not consist literally of someone outbidding the second-highest by $1, but rather some guesswork about what bid is enough to convince the seller that no better offer is available. But this offer will be no higher than the potential buyer’s value for the property, which will be lowered by the factors noted above, and the guesses about alternative offers will be pushed downward by those factors also. Thus the exact real world results may not be as predictable as the theoretical case, but the fact that there is a reduction in value is unchanged.

Finally, the person/family who values a property the most is almost always, by far, the one who is living there. This is why very few sales result from an interested buyer making an offer for a property that is not actively for sale. So when residents suffer problems from nearby IWTs that make them want to move, the market value is dramatically reduced because the bidding for the property no longer includes the person who previously placed the highest value on it. Even worse than this impact on the market value, the benefits from that piece of land to overall human happiness — because it no longer provides net benefits to those who valued it the most — is reduced even more.

Empirical studies are required to determine how much property values are decreased near IWTs, and that magnitude might affect policy decisions and certainly affects cost-benefit analyses. The methods for doing such studies are highly imperfect; hence, there is room to criticize the estimated magnitude.

One thing we know for sure is that any study or assertion that insists there is no impact — is wrong.

  1. Comment by sue hobart on 02/12/2014 at 8:12 pm

    my property was priceless to me… then the turbine changed everything forever… Now it sits empty and sad…me too.

  2. Comment by gail mair on 02/12/2014 at 11:59 pm

    Ditto!
    We are waiting for the turbine contract to expire – 13 years to go, then the turbines should be dismantled according to the agreement – but we’re in Italy. A deposit was laid by that may be just enough to remove one turbine, Poggi Alti has ten. I’m hoping they’ll at least be shut down for good.

  3. Comment by Andreas Marciniak on 02/13/2014 at 12:53 am

    I have returned to my Home in Waterloo South Australia after 2 years, to sell it, I spent the last three month, 4 days out of 7 getting it ready for sale that is the most I can but up with the Ill effects from the Turbines, have a sign, “for Sale”, but had NO one even rings to find out the price, seen people stop to get the phone number but no one has rang back to find out the price, and my Home is 3.5 km from the nearest Turbine, one of 37 X 3 mgw unites spread over 18 km ridge, if I ask people how far do they think the Turbines are from my place, most guess 1 km, because of the sheer size of them, all I can do is get my home ready and as soon as I have done with that I have to get out and see if a Agent can sell it on my behalf, don’t like my chances.

    I do have a problem with selling it, because I know what the Turbines can do to your body and soul, but it is what I had worked for all my life and I need to make a new start some where a long way from Turbines, after Mum past a way over a year ago I had to move out of her shed and stayed with my Brother In law, and I can’t stay with him forever, so I need to sale , to make a new start.

  4. Comment by Dawn Devlin on 02/13/2014 at 9:19 pm

    The Massachusetts CEC (Clean Energy Center) funded study showing that wind turbines near homes don’t harm property values reminds me of the MA DEP health study that never examined anyone who lives near the turbines. The authors of the paper are located in California and Connecticut who have no experience as appraisers and, as far as I know, have never visited any town in Massachusetts as part of their research.

    Doesn’t it make more sense to talk to appraisers and realtors in the actual communities that were impacted? The main flaw is that the study took averages and not individual homes into account. The numbers do not tell the whole story, my personal experience selling houses contradicts the study’s conclusions.

    If the CEC wanted to find out what the impact was I would suggest they look at the Multiple Listing Service data as well as expired and cancelled listing comparison for homes that no one would buy. They also have to take into account properties listed by owners in the affected area. In fact, not a single property sale is cited in the study

    As a Realtor in this area the value of property in areas affected by the turbines has been something I have been paying very close attention to for the past two years. I know of at least five homes that would be on the market right now because some of the residents in those homes have become ill from the turbines. They are not listed as the owners don’t feel they would be able to get fair market value, soon they may have no other options. In two years only 4 homes have sold within the affected areas even though Fairhaven has seen a rise overall in home sales. There are at least 4 homes in the affected area that have been listed by a Realtor or for sale by owner, priced at fair market value, on the market an average of 190 days. This cannot be a coincidence.

    Why did the MA Clean Energy Center (your tax dollars at work, folks) spend $70,000 on this seriously flawed study? In my opinion to make this study more accurate a breakdown of sales in towns that have turbines is needed. Then to go one step further with a breakdown of homes within 1500 feet of industrial sized turbines. This would have given it at least some credibility.

    The Commonwealth seems more focused on meeting the Governor’s wind energy goals than investigating the facts on the ground. Enough with the dubious studies already. Let’s investigate the real human suffering – both financial and physical – that these turbines cause.

  5. Comment by Marie Stamos on 02/17/2014 at 8:44 am

    As with realtors, every appraiser lives by a Code of Professional Ethics and Standards of Professional Appraisal Practice, violations of which can result in remedial or disciplinary actions.

    It is obvious that MACEC and the creators of “Relationship between Wind Turbines and Residential Property Values in Massachusetts” (January 9, 2014) share no similar obligation or commitment to the “preservation of a healthful environment.”

    It is truly confounding to any realtor or appraiser why MACEC did not select a (or several) licensed independent appraisers to assess the property value impact to homes where industrial wind turbines were built with no regard to proximity to people or their most prized possession, their homes. Equally confounding is the MADEP/DPH’s “Wind Turbine Health Impact Study: Report of Independent Expert Panel” (January 2012). Complaints dating back several years are what initiated these “studies” and yet not one victim, those being made ill or those who abandoned their homes, were included in the studies. Also to be questioned is why MADEP (WNTAG/Wind Turbine Noise Technical Advisory Group) has been charged with “possibly” revising noise policies when the noise policies in existence are not being enforced and people are suffering because of that lack of enforcement. And, MA DPU is “investigating” so-called best practices for the siting of land-based wind energy facilities when, from the Hoosac project to the Fairhaven project, we already know where they do not belong and nothing is being done to stop the offending industrial wind turbines.

    I share the following, excerpted from the Realtor Code of Ethics and Standards of Practice.

    Preamble

    Under all is the land. Upon its wise utilization and widely allocated ownership depend the survival and growth of free institutions and of our civilization. REALTORS® should recognize that the interests of the nation and its citizens require the highest and best use of the land and the widest distribution of land ownership. They require the creation of adequate housing, the building of functioning cities, the development of productive industries and farms, and THE PRESERVATION OF A HEALTHFUL ENVIRONMENT.

    Such interests impose obligations beyond those of ordinary commerce. They impose grave social responsibility and a patriotic duty to which REALTORS® should dedicate themselves, and for which they should be diligent in preparing themselves. REALTORS®, therefore, are zealous to maintain and improve the standards of their calling and share with their fellow REALTORS® a common responsibility for its integrity and honor.

  6. Comment by Bruce on 05/26/2014 at 12:30 pm

    I have a friend in Mills County, Texas, home to one of the newest wind farms. He does closings for property sales. He couldn’t tell me how much values have gone down within view of a wind turbine because there are no sales. When someone from a city like Austin calls a realtor and asks about rural property they always ask if there is a wind turbine in sight. If there is they say good-bye and look elsewhere. NO-SALE.

  7. Comment by Bruce on 06/02/2014 at 3:09 pm

    Several years ago I was looking for rural property in Central Texas and thought I had found the right place until I visited the property. On the adjacent property and in the western view was a very large transmission line. I said no thanks. So with one less buyer in the market for the property there is less competition and I would assume a lower selling price. Did others feel as I did? I don’t know but at least one less buyer is a fact.

The comments are closed.