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Analysis: Apartment Complexes Don’t Decrease Nearby Home Values

March 2, 2021

Not-in-my-backyard concerns tend to grow among homeowners near proposed high-density apartment and condo units as residents fear such developments might affect their home values. But they needn’t worry, according to a new study. The analysis finds that prices for rental and single-family properties continue to climb even when high-density apartments and condos are nearby.

A report released by the Kem C. Gardner Policy Institute at the University of Utah studied the impact that 9,600 rental units built between 2010 and 2018 had on nearby single-family-home values in a suburban area of Salt Lake County in Utah. Prices of homes located within half a mile of the new construction over those eight years accelerated even as the denser housing popped up nearby.

“When we look at the median market value per square foot of a single-family home, we see that homes that are within a half a mile of the new apartments tend to have a higher per square foot,” Dejan Eskic, report author and a senior research fellow with the Gardner Institute, said recently during a virtual roundtable discussion about the study.

Cities across the country are grappling with a housing affordability crunch. Lower-cost, denser housing has long been suggested as an answer for adding greater low-income housing. But it’s usually met with resistance from nearby homeowners who fear the impact on their home values.

“We’re struggling, and communities across the nation are as well,” Salt Lake County Mayor Jenny Wilson told the local Deseret News. “We have that additional challenge in our county of less developable land. The answer really [is] we have to build differently. … We will continue to have multi-acre parcels, we will continue to have that suburban feel in our community, and we have to be smart about where and how we build. We are going to need to embrace density in our communities, and with that, there’s a responsibility of developers to do it well.”