Apple Valley/Eagan - Specific Question (35E Noise) and general thoughts wanted

[AVguy]

I am not exactly sure why you would think that highway noise would affect the resale value of the houses located near Interstate 35E. Interstate 35E was built between Burnsville and I-494 in the 1980s, so any land located near 35E has been subject to highway noise for the last 20 years. Any house built before the construction of 35E might have taken a hit in value once the highway was built, but the downward adjustment in value would only happen once because any future purchaser would be fully aware of the highway noise, as would the next purchaser, and so on. Any house built after the construction of 35E would already have the lower land value incorporated into land at the time the house was erected because the first owner of the house would know of the highway noise, as would the second owner, and so on. In general, any negative adjustments to housing values due to highway noise usually occur once, assuming that the noise pollution does not worsen.

I have to question the premise that highway noise drives down the value of housing. People pay a premium to be near the highway because it lowers commuting time and is generally considered a convenience. Additionally, if you look at the most expensive house on the MLS in Apple Valley (a $3.5-million gem), it is located at the intersection of 35E and Highway 77, and the house is visible from 35E, meaning that highway noise is definitely present there. Highway noise apparently is not an issue for this upscale neighborhood as these are the premium residences in Apple Valley. In my opinion, so long as you cannot hear the highway noise when you are in the house, it probably will not affect your standard of living. Of course, a wooded lot near the highway helps a lot too.

ISD 196 schools are highly touted and people will move to this area solely for the public schools. The Minnesota Department of Education gives report cards to schools for schools based on testing, and ISD 196 always ranks near the top. I looked at Paideia Academy, as catluvr suggested, but many of the elementary schools in ISD 196 exceed Paideia Academy. (Yes, there are other things to keep in mind, such as class size, curriculum, etc., but the report-card system provides an objective standard to make an apples-to-apples comparison.) Paideia Academy received 4 stars for reading and 3 stars for math, while Highland Elementary received 4 stars for reading and 4 stars for math and Greenleaf Elementary received 5 stars for reading and 4 stars for math. Though Paideia Academy is probably a very good school, as indicated by its test scores, the public schools in ISD 196 are good enough that you do not need to send your kids to private school. Having both great public schools and private schools will help your house retain its value.

By the way, the new airport runway affects the Cedar Avenue corridor more than the east side of Eagan because the new runway runs parallel of Cedar. The east side of Eagan has always been susceptible to airport noise as the two most frequently used runways run parallel with Highway 55, which runs through the east side of Eagan.

[SlyFrog]

Originally Posted by AVguy

I am not exactly sure why you would think that highway noise would affect the resale value of the houses located near Interstate 35E. Interstate 35E was built between Burnsville and I-494 in the 1980s, so any land located near 35E has been subject to highway noise for the last 20 years. Any house built before the construction of 35E might have taken a hit in value once the highway was built, but the downward adjustment in value would only happen once because any future purchaser would be fully aware of the highway noise, as would the next purchaser, and so on. Any house built after the construction of 35E would already have the lower land value incorporated into land at the time the house was erected because the first owner of the house would know of the highway noise, as would the second owner, and so on. In general, any negative adjustments to housing values due to highway noise usually occur once, assuming that the noise pollution does not worsen.

Wow, an efficient market economist after my own heart!

I agree with most of what you said. I have just heard (and believe) that houses with some "nuisance" value can take longer to sell and remain on the market for longer periods of time. You need to find that later "right" buyer who also does not mind the nuisance. As much as we might believe that setting the right price resolves everything, there is not a large enough pool of buyers to have the real estate market be absolutely price efficient (such that if you lower the price to the proper point, you will have a pool of buyers who will purchase). It is not a fully fungible commodity, so sometimes having defects means waiting longer on someone who will buy at a higher price.

Originally Posted by AVguy

I have to question the premise that highway noise drives down the value of housing. People pay a premium to be near the highway because it lowers commuting time and is generally considered a convenience. Additionally, if you look at the most expensive house on the MLS in Apple Valley (a $3.5-million gem), it is located at the intersection of 35E and Highway 77, and the house is visible from 35E, meaning that highway noise is definitely present there. Highway noise apparently is not an issue for this upscale neighborhood as these are the premium residences in Apple Valley. In my opinion, so long as you cannot hear the highway noise when you are in the house, it probably will not affect your standard of living. Of course, a wooded lot near the highway helps a lot too.

It was for us. I looked at those houses. There is one that is near 77 that receives a lot of road noise. I would never consider it due to that factor, regardless of price.

Great post by the way. I hope it is clear that I'm not taking shots at you, just disagree slightly in certain cases, but appreciate the well thought out input you gave.

[Ben Around]

"People pay a premium to be near the highway because it lowers commuting time and is generally considered a convenience."

Not this person!!

[AVguy]

Thanks, SlyFrog, I appreciate your response and your insight. I tend to agree with you that nuisance properties are generally more difficult to sell because of the limited number of buyers. An efficient-market proponent would respond that a smaller pool of buyers would be reflected in a lower price, along with any other characteristics of the house, both good and bad, that could potentially affect the value of the house, and that an appropriate price may sway certain buyers to purchase a larger house with more noise instead of a smaller house with less noise. I am not totally on-board with that theory but I do generally think that a house is worth whatever was paid, assuming full disclosure, good representation, people buying within their means, etc. (These are some pretty hefty assumptions!)

You are absolutely right that it is probably not wise to drop a couple mil on a house with an obvious nusiance factor (loud, persistant highway noise) because there are so few potential future buyers, many of whom can customize and construct a new house not more than 10-15 minutes away. Personally, I would not buy a house next to a freeway or close to the airport, and like you, it all comes down to personal preference. You will have to let us know what you think of the neighborhoods containing high-end housing in the ISD 196 area. I am still pretty new to the area and will be looking for an upgrade in housing in a few years. Good luck with your search!

[Ben Around]

I was amazed a few years back when those huge $1M+ homes were built along the river bluff at 35E and Hwy 13. The river bluff I get, but why would anyone want to build such an upscale house next to 35E? I would've spent more $ on a river bluff lot away from the highway, and if budget was a factor, less on the house itself.

Yes, to each their own, but the potential resale market for these homes will be very limited.

[hi ppl]

how the heck to I start a new question on this site.

[GraniteStater]

Originally Posted by hi ppl

how the heck to I start a new question on this site.

Click on the new thread button near the top of the page.