Tanja Tyvimaa Tampere University of Technology Velma Zahirovic-Herbert University of Georgia Karen M. Gibler Georgia State University T HE E FFECT OF A GE -R ESTRICTED H OUSING ON S URROUNDING H OUSE P RICES

EXTERNALITY EFFECTS

RESEARCH QUESTION  What is the influence of age-restricted multi-family “senior houses” on prices of nearby condominiums?  Premium associated with restrictive covenant that reduces risk associated with future neighboring property use?  Premium because units removed from general market, increasing bidding for remaining units?  Discount because younger people do not want to live around many elderly people because of lack of congruence in person-environment fit?  No effect

PREVIOUS RELATED RESEARCH  Effect of Restrictive Covenants on Value of House  Pet restrictions increase value (Cannaday, 1994)  Pet restrictions decrease value (Lin, Allen and Carter, 2013)  Strictness index based on 10 physical and use restrictions + enforcement positively related to value (Hughes and Turnbull, 1996)

PREVIOUS RELATED RESEARCH  Effect of Age-Restriction on Value of House  Premium for condominiums in Florida (Allen, 1997)  Premium for manufactured houses on restricted lots in Arizona (Guntermann & Moon, 2001)  Premium disappears when age restriction removed (Guntermann & Thomas, 2004)  Premium during rising market, but discount during falling market (Carter et al, 2013)  Premium unless property already located in area with majority of elderly residents (Lin, Liu and Yao, 2010)

PREVIOUS RELATED RESEARCH  Effect of Age-Restriction on Value of Rental Multifamily  Inconclusive (Wiley & Wyman, 2012)

PREVIOUS RELATED RESEARCH  Why Age Restriction Covenants May Have Positive Externality Effect  Neighborhood security (Guntermann and Thomas, 2004)  House maintenance (Guntermann, 2002)  Why Age Restriction Covenants May Have Negative Externality Effect  Negative image of senior housing (Gibler et al., 1997; Tyvimaa, 2013)

PREVIOUS RELATED RESEARCH  Effect of Government Subsidized Age-Restricted Multi- family Housing on Value of Neighboring Houses  Negative ¼ - ½ mile in Minnesota (Lyons and Loveridge, 1993)  Positive up to 1 mile for some; no effect for others in California (Cummings and Landis, 1993)  Positive 3 blocks away in Oregon (Rabiega et al., 1984)  Positive, but short lived within ½ mile in Iowa (Funderburg and MacDonald, 2010)  Positive in California (Deng, 2011)

HEDONIC MODEL  P = sales price  X = unit and building structural characteristics  R = access and distance  F = fixed effects for location (zip code) and time (year and month of sale)  S = Age-restricted housing within 200 meters ln P ict = α + b X it + γ R it + ζ F it + φ S it + ε it

RESEARCH ENVIRONMENT TAMPERE, FINLAND

RESEARCH ENVIRONMENT TAMPERE, FINLAND  City population 210,000 (340,000 metro)  30% population age 55+  72% households live in multi-family buildings  Senior house = independent living, age 55+  2,300 senior housing units (70% rental)

DATA  16,862 resale non-age-restricted condominium transactions  January 2005 – September 2012  Median condominium price 107,000 Euros  Median condominium size 56.0 sm  Average building age 38.5 years  Most common building height: 3 stories  Average distance lakeshore 491 m  16% condominiums sold have at least one senior house within 200 m  35% of those had a senior house with a nursing care unit  If senior houses within 200m, average 85 units in area

OLS RESULTS: LN PRICE DEPENDENT VARIABLE

CONCLUSIONS  Condominiums in a building located near an independent living senior house sell at a slight premium  Positive effect reduced if short-term nursing unit in same building  How to integrate different types of senior housing offering necessary support into the community in a positive way?