April 2020 - Parks & Recreation - 24

FINANCE FOR THE FIELD
How Much Impact Do Parks
Have on Property Values?
By John L. Crompton, Ph.D.

T

he Board of Commissioners of Central Park in their annual reports from 1856 through 1873 were the first to attempt to answer
the question of how much impact parks have on property values.
Subsequently, many other studies emerged, but when viewed
through today's lens, their results were naïve and unconvincing because the
research tools available to them were relatively primitive.
Around the start of the new
millennium, five key methodological developments ushered in a
new era of sophisticated studies:
(1) research models became more
robust, so they could incorporate
many more explanatory variables; (2) statistical tools were
more sophisticated, so more of
the potential factors likely to influence a property's value could
be controlled; (3) multi-listing
services' electronic databases be-

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Parks & Recreation

came available, so sales values
rather than assessed values could
be used; (4) Geographic Information Systems enabled distances between residential dwellings
and parks to be measured along
street networks, rather than only
by straight lines; and (5) electronic mapping meant researchers
no longer had to physically visit
sites to measure distances and
determine access, so sample sizes
could be larger.

| A P R I L 2 02 0 | PA R K S A N D R E C R E AT I O N .O R G

Impact of Distance from a
Park on Sales Price

In a recent article in the Journal of
Leisure Research, Sarah Nicholls, a
professor in the department of business at Swansea University's School
of Management, and I reviewed 33
studies published in peer-reviewed
publications during the new millennium, which measured the impact
of distance from a park on the sales
price of a residence. The review revealed six insights, comprising:
Direction and Magnitude of Impact. In all but three of the 33 studies a positive premium emerged.
The magnitude of the premium reported in each study was assigned
to one of three categories: lower
than 4 percent, 5 percent to 9 percent and 10 percent or higher.
Approximately the same number
of premiums were classified into
each category. This led us to conclude that a premium of 8 percent
to 10 percent on property values
abutting or fronting a passive park
in urban environments is a reasonable starting point guideline for developing estimates.
In the three analyses where parks
had either no significant impact on
sales price or a significant negative
impact, the unexpected findings
were attributed to noise, congestion
and reduced privacy being sufficiently disturbing to adjacent property owners that they outweighed
the positive amenity value associated with being close to a park.
Range of the impact. There was



April 2020 - Parks & Recreation

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