STUDIES SAY CASINOS HAVE NEUTRAL EFFECT ON PROPERTY VALUES

STUDIES SAY CASINOS HAVE NEUTRAL EFFECT ON PROPERTY VALUES

May 9, 2012

A recent Ipsos Reid poll reveals that a slim majority of Torontonians, 53.5%, would support the building of a new casino in Toronto.

The highest support came from Scarborough, where 58.6% of residents gave it a thumbs-up. In York and East York, the figure dropped slightly to 54.3%; in North York, 55.2%; Etobicoke and the old City of Toronto trailed behind, with 49.0% and 49.6% approval, respectively.

As for location, the most popular site was on the grounds of Woodbine racetrack, with 54.4%, followed in order by the Exhibition grounds, Ontario Place land, Downsview Park, East Waterfront Portlands and the Toronto Convention Centre, with only 30.5% approval.

The poll found that if the casino were part of a larger establishment that included restaurants, stores, entertainment and a hotel, 37% of residents would be more supportive; 59% of the 810 Torontonians polled said they thought a casino would have a positive impact on the city. (Not sure what that means. Since 53.5% would support it, are the other 5.5% against doing things they think will have a positive impact?)

Sixty per cent of respondents said they were worried about the criminal activity that would come with a casino; policing costs and social services were the second and third-highest biggest concerns.

But what about property values?

According to one study quoted by a Jobs for Foxborough spokesman when the nice folks of Foxborough Massachusetts were considering a casino proposal earlier this year, “There are numerous studies that clearly show that casinos have either no effect on housing prices, or a modest positive effect, likely due to increase in employment and subsequent sales activity.”

One of the studies he’s talking about was conducted in 2005 by the Rappaport Institute for Greater Boston at the Kennedy School of Government at Harvard University. (I don’t know what the heck that is, but hey, Harvard, right?) The study found that median house prices in casino counties rose about $6,000 more than in non-casino counties.

A 1999 National Gambling Impact Study sponsored by former President Bill Clinton, considered the “most authoritative and exhaustive peer-reviewed study of gambling in the history of the country,” according to the Foxborough gent, found the same thing.

All of which got me thinking, if a casino has a negligible effect on property value, what does have an impact?

A joint study by UCLA and Dartmouth in 2004 found a 10% swing in home values between houses in school districts where mean test scores were within the lowest quarter of the country’s average scores, and a home where students’ average scores were among the top 25%.

According to an Ohio Cemetery Proximity and Single-Family House Price survey that looked at four area cemeteries, two had no effect, an ill-maintained one dropped prices by more than 10% and a well-maintained one raised home values by more than 8%.

In 1996, an Appraisal Institute study found that houses with frontage on a golf course helped home prices fetch an 8% premium compared with other area homes. In 2010, with Boomers itching to grip and rip their way through retirement, the Institute found golf course views commanded a 42% to 85% premium at a Jack-Nicklaus-designed course in South Carolina.

The same study gave houses with lake views a 94% to 133% price jump over their neighbours. Houses directly on a lake fetch between 124% and 287% more.

According to Virginia Tech University, great landscaping can boost home value by 5% to 11%.

A study that looked at 11 communities in Massachusetts found that a community with a more active arts and culture scene were good for the real estate business.

While those are the good neighbours, some bad neighbours can wallop your home values.

The University of California at Berkeley says home values within two miles of a powerplant will drop home prices between 4% and 7%. An Arizona assessor’s office says a neighbourhood near a landfill loses 6% to 10% in value; a hazardous waste site is good for a 15% drop. Researchers at Longwood University in Farmville, Virginia, concluded (some might say obviously) that the presence of a sex-offender within one-tenth of a mile reduced home values by about 9%, and that the homes will take 10% longer to sell than those in non-sex-offender neighbourhoods.

Also detrimental according to multiple studies (and common sense) are traffic/airport noise, ill-maintained rental units, and bad neighbours who leave cars up on blocks and abandoned tires on their lawns. Churches were found to be both bad (according to the Journal of Real Estate Finance and Economics) owing to “negative externalities” like bells, loud speakers, music, too many people coming and going, traffic and parking congestion, and also good, according to some other fellows at the same publication, owing to “positive externalities” like symbolic morality, and a respite from commercial concerns. Guess it depends which side you’re on.

Surprisingly, according to a study by the University of Maryland, house prices are unaffected by the presence of clubhouses or community centres, and adversely affected by the presence of ball fields, playgrounds and swimming pools.

Perhaps more surprisingly, it doesn’t look like a red light district has any ill-effect. According to the 2009 Encyclopedia of Urban Studies, property adjacent to a red light district may in fact be a sound investment, as it has the potential to appreciate significantly with area rejuvenation, as they’re often located in areas that are relatively central but underdeveloped.

All of which tells us that a lot of people spend a lot of time conducting studies.

It also tells us, in a nutshell, that casinos are neither good nor bad for property values, which is, well, neither good nor bad news for those who end up next to what’s sure to become a Toronto casino. A development team from MGM, who own Bellagio, Luxor, Mandalay Bay and the Mirage in Las Vegas last month met with Rob Ford’s staff and a clutch of councillors and political aides and expressed a preparedness to invest between $2 and $6 billion in a Toronto property.

It doesn’t, however, look like a red light district is going to get off the ground. Moonlite Bunny Ranch owner Dennis Hof said he’d be scouting Toronto locations this June, which didn’t seem to sit well with Premier Dalton McGuinty. When asked about the possibility of a Toronto branch of the Bunny Ranch, he responded with a nervous laugh and a succinct, “Next question.”

-newinhomes

Ilan Joseph is a Real Estate Broker with Sutton Group and is co-founder of a 10-person award-winning team Toronto real estate team. You can find him on Twitter and . Over the past 10 years, Ilan has provided more than 1300 buyers and sellers valued advice and service to enable them to reach their real estate goals. He’s kind of like the Bruce Willis of real estate.