De-Bunking Porter's Claim on Property Values

Academic Research Shows Jet Operations Lower Real Estate Values October 24, 2013 Wikimedia_Photo_Contrail_KLM_2013-10-10TORONTO – Porter is claiming that real estate values will not be harmed but aided by putting jets on Toronto’s waterfront; an outrageous claim that doesn’t rhyme with established research on real estate values and the impact from major airport operations. The current Island Airport is frequented by 2 million passengers – now Deluce wants to grow it to 4 million and more by putting jets on the waterfront. That will mean more pollution, more gridlock. 1.4 million additional cars will head down to the Island Airport every year. Flight paths for the jets will be lower than current approaches, affecting neighbourhoods from Mimico to the Scarborough Bluffs. So how will real estate prices not be affected? Real estate prices are affected once an airport uses jet aircraft. As a study by the California State University put it ((Airport noise and residential housing valuation in southern California: A hedonic pricing approach" by  M.  Rahmatian and L. Cockerill in International Journal of Environmental Science and Technology, Spring 2004)): “It also appears that homeowners distinguish between large airports and small airports. Homes located underneath the flight pattern of a large airport have a price gradient that is steeper than homes located underneath the flight pattern of a small airport.” Let’s take a more detailed look at the international research. United States In the US in 2003 Pennsylvania State University research showed prices fell by 10% to 12% because of noise. The study compared estimates for 23 airports in the US and Canada. The cumulative noise discount in the U.S. is about 0.5% to 0.6% per decibel at noise exposure levels of 75 dB or less, while in Canada the discount is 0.8 % to 0.9% per decibel. Netherlands In 2009 research by academics from the University of Amsterdam showed property values near the Amsterdam airport fell by around €1,450 per decibel of noise from approaching or departing aircraft. Amsterdam: We find a marginal benefit of 1 dB noise reduction of 1459 Euro per house, leading to a total benefit of 1 dB noise reduction of 574 million Euros. UK The expansion of London-Stansted airport with daily jet operations led to a property value loss of $1.1 CAD for homeowners in the vicinity, an analysis of official tax evaluations showed. Germany In 2012 a study commissioned about airport expansion in Frankfurt produced results showing price falls of 14% for homes most severely affected by noise. The local state government even set up a fund to compensate home owners for falling property prices. The study by the University of Chemnitz showed that flight paths impact property prices as well. For each kilometer closer to the flight path, housing prices drop by an average of 100 Euro per square metre. Conclusion The claims by Porter and its allies that real estate prices will benefit from jets on Toronto's waterfront are taken out of thin air. International studies by various universities paint a stark picture. Property prices will take a hit through outright decreases or stunted growth rates. This will not only create problems for real estate owners but also the City of Toronto through lower assessments and tax receipts. With less property tax revenues coming from jet-affected areas, other parts of the city have to pay the balance. ______________________________________________________________ References: