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Forensic Appraisal Group, Ltd.

Highway and roadway projects can either be a blessing or a curse depending on what's being done.  A new highway may be a blessing for an obscure business that suddenly finds itself off of a major on/off ramp.  However, the same highway may be a curse to a landowner who built their retirement home in what was a peaceful, secluded spot.  With the new highway comes more traffic, and with it comes the exhaust fumes and noise and light pollution.  Unfortunately for those landowners, the increase in noise is not compensable, but the loss of market value of their property due to the noise is.  The rationale is two-fold.  One, noise in itself is a subjective feature.  To the deaf and hard-of-hearing, highway noise isn't a problem.  Two, it would be financially and logistically ridiculous to compensate property owners every time a change is made to road or highway.

To the average person, noise can be a major issue, and this issue will affect the market value of a property that will in turn create a justification for compensation.  Noise is also dependent upon proximity to the source.  The further away from the highway a property is, the less (if any) effects the construction will have upon it.

Through our research of the diminutive effects of highway noise, we have found several government studies that have cited noise as a devaluation factor and many articles that voice the public's concern that noise has ruined their properties. 

Another issue of highway development is the creation of land-locked properties.  A typical scenario of this is of a farmer who has a field abutting a county trunk road.  The DOT changes the road into a highway, thus taking away his access.  A portion of the farmer's field is now accessible only through his neighbors' roads, and they may or may not let him do so.  They are not legally obliged to allow the farmer to access his land.  If none of the neighbors will allow him to access his land, what would the market pay for such a property?

Through our research, we have found several governmental studies that have studied the effects of highways on property values.  The following is a sample of our research.

Transportation Research Record 508 - 1974

An interesting phenomenon occurs when property values along a highway, trail or other mode of transportation is studied.  The surrounding property values increase while the abutting property values suffer.  It's as if most want it, but few are willing to live next to it. 

The study also found that time did not reduce noise annoyance.  Both long-term residents and newcomers found noise to be the single most diminishing factor of their property values.  The study found that the average loss of value per property was $2,050.  To adjust for inflation, the modern amount of loss equals approximately $9,300.

Transportation Research Record 583 - 1976

Properties abutting the highway failed to increase in value at the same rate that properties further away did.

Transportation Research Record 686 - 1978

In this study, the researchers concluded that for every decibel above the accepted 73 decibel level, a property loses $650 in value.  To adjust for inflation, the modern amount of property loss per decibel equals approximately $1,900.

Transportation Research Record 812 - 1978

In this study, the researchers found that homes abutting an Interstate experienced a $3,000 to $3,500 loss in value.  To adjust for inflation, the modern amount of value lost per property is $8,700 to $10,150.

Transportation Research Record 1033 - 1985

In this study, the researchers compared a portion of abutting properties with a sound wall to an identical portion along the same highway that did not have a sound wall.  They found that the unprotected houses sold for less than their shielded counterparts.  However, the second finding surprised the researchers.  They found that though a sound wall reduced the sound level and annoyance, higher property values among the shielded properties did not occur.  Instead, proximity to the highway kept the values where they were.  The study concluded that in light of this evidence, sound walls do not justify the supposed economic benefits of their existence.

A 1987 study of an Ontario highway found a comparable loss of value.  In this study, the researchers found that shielded homes experienced a loss per decibel of $312 to $2,971.  To adjust for inflation, the modern amount of property value lost per decibel is $500 to $4,750.

Our own research of Realtor opinion has found similar results.  In the survey, all six Realtors said that there would be a definite loss of value due to the close proximity of a highway.  All six have had trouble selling such properties, and the proximity to the highway significantly increases the time on the market. 

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For information on Wisconsin highway projects visit the WI DOT website.