Real Estate Values Impacted by Endangered Species Act

Glenn E. Crellin

Director, Washington Center for Real Estate Research

Washington State University

Public policy topics are especially challenging for academic units with close industry ties and no ideological agenda. It was therefore with some trepidation that the Washington Center of Real Estate Research undertook an assignment to evaluate the linkage between enforcement of the Endangered Species Act (ESA) and property values – certainly a contentious public policy issue. When we proposed the project, we emphasized the importance of including associated public policy initiatives such as Washington’s Growth Management Act (GMA), the Shoreline Management Act, etc. The proposal was also clear that results contrary to the expectation of the client were possible.

The project required detailed information about individual properties and about species habitat. The research approach was heavily dependent on Geographic Information Systems (GIS) technology. Ultimately the project was limited to three counties in Western Washington: Clallam County (Port Angeles/Sequim), Clark County (Vancouver) and Snohomish County (Everett).

Property characteristics (size, features, etc.) are primary determinants of value; underlying economics/demographics drive price changes as well. Accordingly, these factors are primary components of the analysis. The question then becomes, how do ESA enforcement activities interact with other factors and change real estate value? Are the impacts the same across geography and for different types of property?

Statistical models were developed for residential, commercial and undeveloped land properties in each community. While the exact variables used in each model were slightly different, the results were surprisingly consistent. Properties, which were subject to higher levels of ESA regulation (meaning they were in the habitat of an above-average number of protected species), accounting for other determinants of value, commanded prices were generally 6-10 % below prices, which would otherwise have been expected. This was true in all three counties, and for all property types. Impacts of Washington’s Growth Management Act were less consistent across property types – i.e. premium prices paid for residential properties outside urban growth areas in some places; commercial prices were generally somewhat lower outside the boundaries; and occasionally the GMA variable did not significantly influence value at all.

This information is provided in the interest of education only. WCRER makes no policy recommendations regarding ESA as a result of this research, and suggests that further research on the topic should be conducted.

Statistics on Washington’s housing market and other useful information are available on WCRER’s Web site: www.cbe.wsu.edu/~wcrer. For other information on real estate markets around the State of Washington, or general information about the real estate industry in the state (excluding legal questions), readers can reach the WCRER at 1-800-835-9683.

April 2003