Does a Mall Bring Down Property Values? (Cambridge, Newton: real estate, apartment complex)

[MikePRU]

In another recent C-D thread here I came across this post . . .

Originally Posted by AtkinsonDan

Personally I have always considered Burlington to be one step down from Lexington or Winchester. I am not sure why Burlington is ignored on C-D but one downside I can think of off the top of my head is traffic. I commuted to Burlington for five years and the traffic was horrendous. As a commuter I could not wait to get out of that place each day. I wonder how I would have felt living there.

This post got me thinking and the only "top tier," "A-list," "super high priced," or however you want to express it suburb that has a big mall in it (at least that I can think of) is Newton. Newton is a bit different from a lot of other suburbs though in that it's a city and fairly large compared to say Lexington, Wellesley, Weston, etc. We've often mentioned in discussions that most people consider having a town center a plus and the majority of people seem to like have some stores/restaurants in town, but is there a line that can be crossed when it comes to how much shopping/restaurants are in town? So, what I'm asking everyone is does having a mall in your town contribute to lower property values? I'm curious to hear people's thoughts.

As Dan points out there's a lot of traffic in Burlington. Burlington has the mall, some other shopping/restaurants, and also some areas with office buildings (to the best of my knowledge I'm not hugely familiar with Burlington). For the sake of conversation, I'll just lump stores, malls, restaurants, and offices into a category of commercial property. Having more commercial property in town certainly contributes to traffic levels. It attracts people from out of town and an office building can be very densely populated during the week compared to even a condo or apartment complex. More people means more cars and more cars means more traffic. Most people view traffic as a negative.

I would also add that most malls are eyesores. I can't think of one that doesn't look like a giant cement block with a Cheesecake Factory stuck in the middle.

I'm a big fan of convenience, but the more I think about it the more I feel a mall might be a NIMBY issue. You like to have them nearby but not too close.

As I said, I've never really thought about there being a link between a mall and real estate pricing before. I'd love to hear if anyone else thinks there might be a link as well. Obviously, it's not the only factor in determining real estate values in a town, but does anyone else think it contributes at all? I know we've had some great discussion about prisons in the past and I hope this is a good one as well.

MODs - please do not move this to the real estate forum. Real estate is quite local and this is a discussion limited to MA towns and therefore it's best fit is in the MA forum. Thanks.

[DL0299]

Natick, Burlington and Woburn all have malls and....very low property taxes.

There is 22 billions of unfunded pension liabilities in Mass. If you believe that unions will make compromises in the next decade to solve this, than there is nothing to worry about.

But if you are not a far left liberal living on your own planet, you just know that taxes will go up and services, including schools, will drop in quality. Not to mention the pressure to lower home prices due to high taxes (Sharon anyone)? Forget about the Chinese millionaires buying cash in this very bizarre economic environment, and focus about the long term market that depends on millenials to keep home prices high. They cant even afford a Honda civic, for god sake.

So to me, a mall is a sound investment that will save me roughly 6 figures of wealth over the course of a 30 years mortgage.

[AtkinsonDan]

Originally Posted by DL0299

Natick, Burlington and Woburn all have malls and....very low property taxes.

There is 22 billions of unfunded pension liabilities in Mass. If you believe that unions will make compromises in the next decade to solve this, than there is nothing to worry about.

But if you are not a far left liberal living on your own planet, you just know that taxes will go up and services, including schools, will drop in quality. Not to mention the pressure to lower home prices due to high taxes (Sharon anyone)? Forget about the Chinese millionaires buying cash in this very bizarre economic environment, and focus about the long term market that depends on millenials to keep home prices high. They cant even afford a Honda civic, for god sake.

So to me, a mall is a sound investment that will save me roughly 6 figures of wealth over the course of a 30 years mortgage.

There are quite a few towns in eastern Massachusetts that show a propensity for sacrificing the very things which make them desirable for the sake of increasing the tax base to satisfy the insatiable appetite for the public sector unions. The long term future of MA will be interesting to say the least.

[495neighbor]

My perception is that Malls do not lower or raise the property value of any town.

Chestnut Hill, high property value before and after Malls
Framingham, Norwood, Peabody, Marlborough, Berlin and most parts of Burlington have maintained consistent property values through all the economic roller coasters.

Burlington has had increased property value due to the influx of Southeast Asian born residents desiring newer construction homes, who can't quite afford Lexington. The Burlington locals live in the more moderately priced homes.

Natick has mall areas and a town center with independent businesses. The areas closest to the mall have stayed moderate value. The areas closer to the town center and south of the town center have increased, likely for reasons outside of whether there is a mall in town or not.

Malls economically benefit more distant outlying areas such as Bellingham and Leominster that do not have a big corporate HQ or many high tech businesses as they create many low to lower middle jobs. The housing cost and COL are already significantly lower in these areas. So the people working in these jobs, at least, have a chance at being able to survive on these wages.

When a mall replaces a large corporate HQ that is when the property values decrease. It would appear that the physical presence of the mall causes the property values to go down. In fact the property values decrease because people who were once employed in higher paying jobs are now required to take lower paying jobs and may need to sell their homes for less than they paid for them.

[495neighbor]

Originally Posted by DL0299

Natick, Burlington and Woburn all have malls and....very low property taxes.

There is 22 billions of unfunded pension liabilities in Mass. If you believe that unions will make compromises in the next decade to solve this, than there is nothing to worry about.

But if you are not a far left liberal living on your own planet, you just know that taxes will go up and services, including schools, will drop in quality. Not to mention the pressure to lower home prices due to high taxes (Sharon anyone)? Forget about the Chinese millionaires buying cash in this very bizarre economic environment, and focus about the long term market that depends on millenials to keep home prices high. They cant even afford a Honda civic, for god sake.

So to me, a mall is a sound investment that will save me roughly 6 figures of wealth over the course of a 30 years mortgage.

This is partially true. You also have to factor increased public safety budget due to increased crime (more vehicle accidents, shoplifting and purse snatching) and higher cost of maintaining roadways due to increased traffic.

[CaseyB]

It depends what kind of mall, where in the town it is located, the type of stores there and the kind of patrons it attracts.

[Pito_Chueco]

I don't think that I would buy a home near a typical garden-variety mall that was surrounded by huge parking lots. However I wouldn't have a problem living near the Galleria Mall in East Cambridge, since that mall does not appear to detract from the walkability of the area. It seems to blend in well with the neighborhood.

[DL0299]

Originally Posted by 495neighbor

This is partially true. You also have to factor increased public safety budget due to increased crime (more vehicle accidents, shoplifting and purse snatching) and higher cost of maintaining roadways due to increased traffic.

Well, say I am buying a 3bdr 2000sq ft "ish" home in Natick compared to Acton. It will cost me 4500$/y in Natick, and 8000$/y in Acton.

That is not partially true to me. Its entirely true. While Acton has no business base to help absorb the crush of debt, Natick does. And when the bills come due, someone will have to pay. Personally, I dont want to be in a high tax town that rely solely on homeowners to finance the lavish retirement of our beloved muni employees.

And what if the debt riddled kids out of college stop buying themselves back crushing mortgage payments all the sudden? You then own a depreciating asset that will cost you more YoY in tax, making it a perpetually worst investment. And I can't afford to loose a penny more than the 120K from the last real estate debacle, where I watched my house sink in value by 10K/month.

The best lessons learned are the hardest, they say. Some will learn too in due time.

[AtkinsonDan]

Originally Posted by MikePRU

I would also add that most malls are eyesores. I can't think of one that doesn't look like a giant cement block with a Cheesecake Factory stuck in the middle.

I'm a big fan of convenience, but the more I think about it the more I feel a mall might be a NIMBY issue. You like to have them nearby but not too close.

When I was younger I liked having access to malls but now I actually have disdain for them. It is not the atmosphere in the mall as much as the trouble it takes to get into one.

(1) Traffic lights around malls seem to have outrageously long light cycles.
(2) Mall parking lots usually have tedious access road configurations with many obtrusive traffic islands.
(3) The parking lots themselves are huge with limited parking that is convenient to entrances.

[495neighbor]

Originally Posted by DL0299

Well, say I am buying a 3bdr 2000sq ft "ish" home in Natick compared to Acton. It will cost me 4500$/y in Natick, and 8000$/y in Acton.

That is not partially true to me. Its entirely true. While Acton has no business base to help absorb the crush of debt, Natick does. And when the bills come due, someone will have to pay. Personally, I dont want to be in a high tax town that rely solely on homeowners to finance the lavish retirement of our beloved muni employees.

And what if the debt riddled kids out of college stop buying themselves back crushing mortgage payments all the sudden? You then own a depreciating asset that will cost you more YoY in tax, making it a perpetually worst investment. And I can't afford to loose a penny more than the 120K from the last real estate debacle, where I watched my house sink in value by 10K/month.

The best lessons learned are the hardest, they say. Some will learn too in due time.

So getting back to the original question.

The prices of homes are going up in Natick, despite having a mall.
The prices of homes are going up in Acton, despite not having a mall.

I stick with my premise that having a mall or not does not increase or decrease property value.