Tanja TyvimaaTampere University of Technology

Velma Zahirovic-HerbertUniversity of Georgia

Karen M. GiblerGeorgia State University

THE EFFECT OF AGE-RESTRICTED HOUSING ON SURROUNDING

HOUSE PRICES

EXTERNALITY EFFECTS

RESEARCH QUESTION

What is the influence of age-restricted multi-family “senior houses” on prices of nearby condominiums?

Premium associated with restrictive covenant that reduces risk associated with future neighboring property use?

Premium because units removed from general market, increasing bidding for remaining units?

Discount because younger people do not want to live around many elderly people because of lack of congruence in person-environment fit?

No effect

PREVIOUS RELATED RESEARCH

Effect of Restrictive Covenants on Value of House

Pet restrictions increase value (Cannaday, 1994)

Pet restrictions decrease value (Lin, Allen and Carter, 2013)

Strictness index based on 10 physical and use restrictions + enforcement positively related to value (Hughes and Turnbull, 1996)

PREVIOUS RELATED RESEARCH

Effect of Age-Restriction on Value of House

Premium for condominiums in Florida (Allen, 1997)

Premium for manufactured houses on restricted lots in Arizona (Guntermann & Moon, 2001)

Premium disappears when age restriction removed (Guntermann & Thomas, 2004)

Premium during rising market, but discount during falling market (Carter et al, 2013)

Premium unless property already located in area with majority of elderly residents (Lin, Liu and Yao, 2010)

PREVIOUS RELATED RESEARCH

Effect of Age-Restriction on Value of Rental Multifamily Inconclusive (Wiley & Wyman, 2012)

PREVIOUS RELATED RESEARCH

Why Age Restriction Covenants May Have Positive Externality Effect

Neighborhood security (Guntermann and Thomas, 2004)

House maintenance (Guntermann, 2002)

Why Age Restriction Covenants May Have Negative Externality Effect

Negative image of senior housing (Gibler et al., 1997; Tyvimaa, 2013)

PREVIOUS RELATED RESEARCH

Effect of Government Subsidized Age-Restricted Multi-family Housing on Value of Neighboring Houses

Negative ¼ - ½ mile in Minnesota (Lyons and Loveridge, 1993)

Positive up to 1 mile for some; no effect for others in California (Cummings and Landis, 1993)

Positive 3 blocks away in Oregon (Rabiega et al., 1984)

Positive, but short lived within ½ mile in Iowa (Funderburg and MacDonald, 2010)

Positive in California (Deng, 2011)

HEDONIC MODEL

P = sales price

X = unit and building structural characteristics

R = access and distance

F = fixed effects for location (zip code) and time (year and month of sale)

S = Age-restricted housing within 200 meters

lnPict = α + bXit + γRit + ζFit + φSit + εit

RESEARCH ENVIRONMENT

TAMPERE, FINLAND

RESEARCH ENVIRONMENT

TAMPERE, FINLAND

City population 210,000 (340,000 metro)

30% population age 55+

72% households live in multi-family buildings

Senior house = independent living, age 55+

2,300 senior housing units (70% rental)

DATA 16,862 resale non-age-restricted condominium transactions January 2005 – September 2012 Median condominium price 107,000 Euros Median condominium size 56.0 sm Average building age 38.5 years Most common building height: 3 stories Average distance lakeshore 491 m 16% condominiums sold have at least one senior house within

200 m 35% of those had a senior house with a nursing care unit

If senior houses within 200m, average 85 units in area

 VARIABLES (4) (5) (6)       

AGE -0.0140*** -0.0140*** -0.0140***AGESQUARED 0.0001*** 0.0001*** 0.0001***UNIT FLOOR 0.0113*** 0.0114*** 0.0114***TOTAL FLOORS 0.0025 0.0025 0.0025SIZE 0.0174*** 0.0174*** 0.0174***SIZE SQUARED -0.0000*** -0.0000*** -0.0000***ROOMS 0.0411*** 0.0410*** 0.0403***CONDITION GOOD 0.1015*** 0.1017*** 0.1016***CONDITION POOR -0.1014*** -0.1014*** -0.1009***SAUNA 0.1054*** 0.1042*** 0.1035***LEASED LOT -0.0177 -0.0188 -0.0197DIST CITY CTR -0.0277* -0.0288** -0.0299**DIST BUS 0.0064 0.0088 0.0196DIST GROC 0.0106 0.0125 0.0139LAKE < 100m 0.0626** 0.0622** 0.0605**LAKE 100-200m 0.0338** 0.0307** 0.0299**% SENIORS in AREA 0.0100 0.0059 0.0074NEW SOLD 200m -0.0010 -0.0042 -0.0041SALES FREQ in AREA -0.0238*** -0.0233*** -0.0226***SENIOR HOUSE <200m 0.0194 0.0029 0.0217SENIOR UNITS <200m   0.0002 0.0002NURSING UNIT ONSITE     -0.0444***       Constant 10.7478*** 10.7521*** 10.7513***

Neighborhood Control (Statistical area) Yes Yes YesTime Control (Month and Year) Yes Yes Yes

     

Observations 16,533 16,533 16,533R-squared 0.8951 0.8954 0.8956

OLS RESULTS: LNPRICE DEPENDENT VARIABLE

VARIABLES

Senior House

Proximity

Senior House

Density

Onsite Nursing

Unit

Senior House within 200 m0.0194 0.0029 0.0217

Number of Age-restricted Housing Units within 200 m

 

0.0002 0.0002Nearest Senior House within 200 m Building also contains Short-Term Nursing Care Unit (up to 12 rooms)

 

  -0.0444***

R2 0.8934 0.8956

CONCLUSIONS

Condominiums in a building located near an independent living senior house sell at a slight premium

Positive effect reduced if short-term nursing unit in same building

How to integrate different types of senior housing offering necessary support into the community in a positive way?