How rezoning affects property value

by Delores
(Tennessee)

Visitor Question: I currently live in a subdivision that is divided into 5 acre tracts and zoned as rural residential.

Currently a rezoning R-1 has been proposed to build 23 homes on a 10 acre lot. This would be the only lot within the subdivision that would have more than 1 residential home per each 5 acre lot.

Also, there are deed restrictions requiring all of the homes to be of at least 2000 sq ft livable space with an attached 2-car garage. I don't see how that many homes of that size would fit on the lot.

Needless to say there is an unfinished subdivision with smaller homes directly across the street from this proposed new subdivision where 58% percent of the lots are still owned by the builder.

I am trying to gather support and information in our effort to oppose this rezoning. Can you please tell me how this type of development will affect the property values in the area?

Editors' Reply: Thanks for your question, which will be of interest to many. Our job here probably is to help you rank the information you have given in terms of its contribution to your argument against the rezoning. So here we go.

Your weakest idea is that the homes won't fit on the available land. Just for the sake of argument, let's say that new streets to be added to the interior of the existing 10-acre lot would take up an outrageous amount of land and that only a quarter acre was left for each of the 23 new lots. That's still more than 10,000 square feet per lot. (One acre equals 43,560 square feet.)

So a 2,000 square foot house with a 500 square foot garage for two cars would take up 2,500 square feet, or a fourth of the 10,000 square feet. Unless your deed restrictions require other things, such as large patios or decks, swimming pools, and such, there is plenty of land. So we would suggest leaving that argument at home.

A medium-strength argument, depending on local custom, could be that the subdivision across the street is still half empty. If you use this argument, call it lack of demand for more housing on a similar sized lot (if indeed the lot sizes would be similar if the proposed rezoning is approved).

While your city technically could overcome that argument with strong data and well-reasoned projections of future market demand, in many places the "real world" argument of insufficient demand is powerfully persuasive.

Another medium-strength argument is the property value argument. We can't really tell you how this type of development will affect property values because there are too many variables that we don’t know about. But just for a moment, if we did have enough information to say we thought it would impact your own property value negatively, we still wouldn't know if that would be enough to persuade your city government.

Here's why. You would need to calculate the overall impacts on property values throughout the subdivision, both positive and negative. A lot with a home on it will be more valuable than an empty lot. Any negative effect on the value of existing homes is likely to be slight, given that the new homes would have to be at least 2,000 square feet. So unless you have a large number of the five-acre lots such as yours, the property value question may be a net gain for the city.

Armed with this information, you can likely evaluate this argument for yourself.

Just to take a detour for a moment, what are the factors that influence how much or how little the new homes would affect your property value?

1. Placement of the ten-acre lot to be divided. If it is at the front of the subdivision, on the edge, or out of sight from other homes, the impact on your property value may be fairly minimal.

2. The prestige of your subdivision. If you are living in an elite reputation subdivision, the damage to property values may be greater than if you are in a large-lot subdivision amidst other large-lot subdivisions.

3. The actual size of homes on existing lots. You have a 2,000 square foot requirement in deed restrictions, but if the reality is that almost every home is 4,000 square feet, then the damage to your value will be a larger percentage than if, for example, your existing homes average 2,400 square feet.

4. The construction and architectural quality of the new homes as compared to construction and materials quality of the existing homes. This would include also whether the new homes are all the same (generally perceived as a negative), whether each is somewhat distinctive but compatible in scale and general style (the best scenario for property value), or whether the new homes are wildly different from one another (usually a negative as well).

5. The whim of appraisers in your area. (No further comment, but appraisers sometimes act on their whims.)

Returning to the main topic, your best argument against rezoning is a neighborhood character argument, or in this case a rural character argument. You should show why you think the rural look and functioning of your subdivision now is pleasant and important to preserve, and then you should show why half-acre or quarter-acre lots are entirely incompatible with that pleasant rural neighborhood character.

Of course, if the water supply, sewers (or geology for private septic systems), roads, or any utilities are scarce or inadequate in quality now, use those arguments about what is called infrastructure to oppose the rezoning.

We know we aren't telling you exactly what you want to hear, but we hope we have given you some good ideas about how to oppose the rezoning. Other pages on this site may be relevant too.

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