Several studies have examined whether multifamily housing has any impact on the value of nearby single-family detached houses. These studies have shown either no impact or a slightly positive impact on appreciation rates. Not only is there compelling evidence that development does not hurt property values of nearby neighbors; researchers at Virginia Tech University have concluded that over the long run, well placed market-rate multifamily with attractive design and landscaping actually increases the value of detached houses nearby. The study cites three possible reasons why this may occur. First, the new multifamily could themselves be an indicator that an area’s economy is vibrant and growing. Second, multifamily housing may increase the pool of potential future homebuyers, creating more possible buyer for existing owners when they decide to sell their houses. Third, new multifamily housing often makes an area more attractive than nearby communities that have fewer housing choices.
To further understand the impacts on housing prices from new development, we analyzed the home values of seven developments in the region: five in Chesapeake and two in Virginia Beach. Four of the projects are single family and/or condominium, two are apartments, and one is retail. The study looked at the average sale price of existing housing within ¾ of a mile to a newly rezoned project. We looked first at 2 years before the project started, and then 3 years after the project started. The result of the study was that the new developments either had a zero or positive effect on the value of the existing housing. This includes adjusting for how the rest of the market faired during the same time period. An exhibit of this study is available by request.