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Valuing the Suburbs: Why Some "Improvements" Lower Home Prices

  • Author(s): Lang, Robert E.
  • et al.
Abstract

A recent effort to precisely gauge how much a particular improvement will add to a home’s sale price reveals some surprising insights about the nature of the suburbs. Research shows that not all home improvements pay off—even some rather expensive ones. Hedonic modeling of recent sales data shows that characteristics such as professional offices and in-law suites can lower a suburban home’s price.

This article explores the reasons why certain property elements actually devalue a house. It argues that the neighborhood context may determine the relative value of some housing characteristics. In general, features that add to a property’s “urban intensity” can lower the sales price of single-family detached suburban homes.

The paper examines why suburban residents mostly resist changes that make their environment seem more like a city. It also considers what implications this resistance has for developers using New Urbanist design and suggests future research to better understand the market for denser and more urban suburbs.

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