SilverBeam Homes Blog

Laneway Homes Decreasing Real Estate Value in Affluent Neighborhoods

by Bevony on December 30, 2021 No comments

A new study done in Vancouver’s west side now shows that residents are more interested in privacy. Privacy is more important to them than even the gentlest density. The study data was published in the Journal of Urban Economics. The data shows how having laneway homes next door in affluent areas can decrease property value by 3.8%. 

Back in 2019, we saw an increase in laneway homes, and we even have a blog post of their emergence. Now in 2021 and into 2022, we are seeing that homeowners want to avoid density. We are not seeing a negative effect on lower and median valued home. But neighborhoods with higher value properties are taking the hit. The effects are seen mainly on Vancouver’s west side. Here we are seeing a decrease of 5% to 7%, but when we go to the East, we are not seeing this effect. 

The data used in the study was extracted from Vancouver real estate sales recorded from 2009 to 2017. Data on sales prices of properties neighboring laneway homes was analyzed. The data shows a negative spillover of building new laneway homes that increase density. The data suggests privacy loss is the main factor.

What are Laneway Homes Anyway?

Laneway homes are similar in structure to garages. But instead of housing cars, they house people. You can read our post on Laneway Homes to find out more about them. That post talks about their history, and why they started being built and used. So it is easy to see how one may feel like you have less privacy if your neighbor has a laneway home. The data suggests 75% of homeowners are not bothered by small density increases around them. But the 25% that are bothered, have pricier homes and are not OK with the loss of privacy. 

What the Numbers Look Like 

There is opposition to increasing density, though it is beneficial to social good to have more particular types of housing units. The study shows that houses within 100 meters of a property with laneway homes on the West Side saw a 2.8% lower sale price. Houses immediately beside a property with a Laneway house saw a 3.8% decrease compared to houses beside those that had a garage but no Laneway home. Houses with the highest values, with a laneway home next door, saw a 4.7% decrease in value.  

Since 2009, developers and homeowners in Vancouver have added some 3000 laneway homes to properties. This, along with rezoning 95% of single family properties, has been a key component of the house strategy to allow 1.5 story homes. 

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BevonyLaneway Homes Decreasing Real Estate Value in Affluent Neighborhoods

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