Save the Whales and Put Real Estate Investment Dollars in Your Pocket

By Melanie Reuter

A new study conducted by Colorado State University reveals a massive premium for homes located near wildlife conservation areas. These findings are the antithesis of other research indicating a premium for properties located near Light Rapid Transit stations and walkable to other amenities. Given that the transit accessibility and walk-to-the-end-of-the-block-for-dinner-and-a-movie are difficult in more rural settings, it is no surprise to see both features boosting property values: one in urban and the other in suburban/rural areas.

Albeit that many find solace in knowing that the land around/behind them will not be developed once earmarked as a conservation site, what is surprising is the premium people are willing to pay for it.

Researchers at looking at the counties of Chaffee, Douglas, Larimer, Mesa, and Routt in Colorado found that consumers were willing to and did pay 20-29% more for similar inventory located off of a conservation site

These comparable properties were not merely typical homes in the suburbs but houses on 35 acre lots and 4.6 acre lots. Homes on large lots commanded a higher price than an “average home” on an average lot flanking a conservation site, but not by a lot. “At a conventionally developed large-lot development, the boost to the average home price of additional privately held land is only nine cents per square foot or $4,062 per acre. A comparable conservation development that turned two-thirds of its development site into protected open space and clustered its homes on smaller lots on the remaining land would provide roughly twice the premium in its sale prices”.

This research is data for developers; the size of the land purchase remains the same but the cost of developing and servicing it is a percentage of what it would be fully developed. Because the homes are clustered to allow for an expansive conservation area instead of spread out across the entire space, there is less area requiring roads, less line for electricity and telephone, and less pipe needed for gas, water and sewer (if they are not on wells and septic). Yet the savings for the developer mean higher yields due to the desire of homeowners to be adjacent protected space.

Although the research was conducted in Colorado, there is no reason to think it would not apply to other communities with capacity for large scale developments and the ability to include conservation land. A survey conducted by the National Association of Realtors in the US found that 90% of the respondents stated that environmental features were important to their housing choices. Click here to read the full study.

Melanie Reuter is the Director of Research with REIN Canada, a real estate research and education company that has been serving investors across Canada for 21 years. She has a Master of Arts Degree from California State University, San Bernardino and a BA from Simon Fraser University in Burnaby, BC.

Cover photo: www.eofdreams.com