Flower Mound Leader > News
Council hears presentation on drilling-property value impact
By Chris Roark, Croark@acnpapers.com
Flower Mound recently took its first stab at trying to answer the question of if and how gas drilling impacts property values.
During a work session Monday, it got some answers. Though some were mixed answers.
Dan Wright, director of Integra Realty Resources, presented his group’s findings to the Flower Mound Town Council following an impact study last summer. The study focused on single-family residences, as well as independent compressor sites, though Wright said there wasn’t a lot of data available for those sites around single-family residences.
The four types of methods used in the study included price/distance relationship, which considered the prices of homes per square foot compared to the distance of a well site in feet.
Another method was a sales comparison analysis. Home sales adjacent to well sites were valued with four comparable properties, making adjustments for common value attribute differences. The sale price for the house adjacent to a well site was compared to the estimated value of the house if it wasn’t adjacent to a well site.
A third method used was statistical analysis. Linear regression analysis was used to remove the influence of gas well proximity on residential sale prices.
And the fourth method was commentary from people such as real estate agents and home builders, which Wright said could very well be biased.
Wright noted that many variables can impact property values and can make real estate an imperfect market, and that this study included many of those variables, such as properties with a buffer around the drilling operations versus those without much of a buffer.
Generally speaking, Wright said, the cost of a home and the distance from a pad site to a home were key factors in noticing an impact.
Deputy Mayor Pro Tem Tom Hayden asked Wright if gas drilling helps or hurts property values in a given subdivision, specifically Wellington.
“There was some negative impact for properties fairly close in proximity to drill sites,” Wright said of the study’s indications. “Properties 750 feet away or less, there was some negative impact, especially over the $250,000 price point. But when you look at the data under that price level and beyond the distances of 750 feet, we got very mixed results. We even got some results that showed that property values were more when they’re closer to a site.”
Wright said that he has heard both sides of the argument from property owners living near a well site. Some say they don’t want to live next to it, while others welcome the royalty checks they receive when they lease their minerals.
Wright said the study also indicated that a well site impacted the amount of time a home was on the market if drilling operations were ongoing at the time and if the homeowner could see and/or hear operations. That was according to the commentary method of the study.
Wright said that using the price/distance relationship method, Integra discovered that there was a drop in sales price from 2-7 percent for homes valued at $250,000 or more.
“But the impact on the pricing clearly started to dissipate somewhere between 1,000 and 1,500 feet,” Wright said.
In the sales comparison analysis, Wright said, the study indicated that the impact could be between minus 3 and minus 14 percent on property with the dissipation level being between 750 feet and 1,000 feet. He said that it’s important to look at each site individually but added that a buffer in the area often led to an impact level of near zero.
Hayden said these findings reinforce the idea that the town should place an emphasis on buffering options and more screening around the pad site.
“Maybe we need to beef up our buffering options during and after drilling operations when we look at our gas drilling ordinance,” Hayden said. “We can’t completely hide the rig, but we should look at buffering since that seems to provide less impact on property values.”
Using the statistical analysis method, there were 10 well sites that were studied. Of those 10 studies, eight indicated that distance from a property to a well site were not statistically significant, Wright said. The remaining two showed that there was a significant impact with one being a favorable one and the other being negative.
The commentary method also yielded mixed results.
“Intuitively, most people will say there is some kind of impact,” Wright said. “We do know that within the marketplace there is a certain amount of people who don’t want to be around that. We had some people comment that this is something that’s most noticeable when you have drilling activity actually going on. We’ve noticed that as these activities cease, these impacts can lessen.
Wright also said there is little data that suggests that there is damage in property value from compressor stations but that the areas that seemed to be impacted were those of homes valued more than $250,000 based on the price trend and sales comparison methods. He noted that there have been technology advancements to limit sound.
Hayden said he was happy that the study was conducted but said more studies should paint a more clear picture down the road.
“This is still in its infancy,” Hayden said of studying the impact of drilling on property values. “So it will be interesting to see the impact two to three years from now.”
During a work session Monday, it got some answers. Though some were mixed answers.
Dan Wright, director of Integra Realty Resources, presented his group’s findings to the Flower Mound Town Council following an impact study last summer. The study focused on single-family residences, as well as independent compressor sites, though Wright said there wasn’t a lot of data available for those sites around single-family residences.
The four types of methods used in the study included price/distance relationship, which considered the prices of homes per square foot compared to the distance of a well site in feet.
Another method was a sales comparison analysis. Home sales adjacent to well sites were valued with four comparable properties, making adjustments for common value attribute differences. The sale price for the house adjacent to a well site was compared to the estimated value of the house if it wasn’t adjacent to a well site.
A third method used was statistical analysis. Linear regression analysis was used to remove the influence of gas well proximity on residential sale prices.
And the fourth method was commentary from people such as real estate agents and home builders, which Wright said could very well be biased.
Wright noted that many variables can impact property values and can make real estate an imperfect market, and that this study included many of those variables, such as properties with a buffer around the drilling operations versus those without much of a buffer.
Generally speaking, Wright said, the cost of a home and the distance from a pad site to a home were key factors in noticing an impact.
Deputy Mayor Pro Tem Tom Hayden asked Wright if gas drilling helps or hurts property values in a given subdivision, specifically Wellington.
“There was some negative impact for properties fairly close in proximity to drill sites,” Wright said of the study’s indications. “Properties 750 feet away or less, there was some negative impact, especially over the $250,000 price point. But when you look at the data under that price level and beyond the distances of 750 feet, we got very mixed results. We even got some results that showed that property values were more when they’re closer to a site.”
Wright said that he has heard both sides of the argument from property owners living near a well site. Some say they don’t want to live next to it, while others welcome the royalty checks they receive when they lease their minerals.
Wright said the study also indicated that a well site impacted the amount of time a home was on the market if drilling operations were ongoing at the time and if the homeowner could see and/or hear operations. That was according to the commentary method of the study.
Wright said that using the price/distance relationship method, Integra discovered that there was a drop in sales price from 2-7 percent for homes valued at $250,000 or more.
“But the impact on the pricing clearly started to dissipate somewhere between 1,000 and 1,500 feet,” Wright said.
In the sales comparison analysis, Wright said, the study indicated that the impact could be between minus 3 and minus 14 percent on property with the dissipation level being between 750 feet and 1,000 feet. He said that it’s important to look at each site individually but added that a buffer in the area often led to an impact level of near zero.
Hayden said these findings reinforce the idea that the town should place an emphasis on buffering options and more screening around the pad site.
“Maybe we need to beef up our buffering options during and after drilling operations when we look at our gas drilling ordinance,” Hayden said. “We can’t completely hide the rig, but we should look at buffering since that seems to provide less impact on property values.”
Using the statistical analysis method, there were 10 well sites that were studied. Of those 10 studies, eight indicated that distance from a property to a well site were not statistically significant, Wright said. The remaining two showed that there was a significant impact with one being a favorable one and the other being negative.
The commentary method also yielded mixed results.
“Intuitively, most people will say there is some kind of impact,” Wright said. “We do know that within the marketplace there is a certain amount of people who don’t want to be around that. We had some people comment that this is something that’s most noticeable when you have drilling activity actually going on. We’ve noticed that as these activities cease, these impacts can lessen.
Wright also said there is little data that suggests that there is damage in property value from compressor stations but that the areas that seemed to be impacted were those of homes valued more than $250,000 based on the price trend and sales comparison methods. He noted that there have been technology advancements to limit sound.
Hayden said he was happy that the study was conducted but said more studies should paint a more clear picture down the road.
“This is still in its infancy,” Hayden said of studying the impact of drilling on property values. “So it will be interesting to see the impact two to three years from now.”
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