Greening boosts home prices—here’s the proof

Susan Wachter

Susan Wachter used GIS technology to show the positive effect of greening on home prices in New Kensington.

RESEARCH/Wharton professor comes up with the facts and figures that show neighborhood greening is a sound investment.

Flowers, as you’d expect, take center stage at the Pennsylvania Horticultural Society’s annual Flower Show. But as you wander the rose-scented aisles this year (March 6-13), you may notice a small booth that features nothing floral at all but showcases some of the most important work done by PHS—the greening of Philadelphia.

The Philadelphia Green program has been around for about three decades, and in 2003 was adopted as part of the City’s Neighborhood Transformation Initiative. Now, a study by Wharton Professor Susan Wachter has given PHS the numbers it needs to prove that planting trees, building parks and clearing vacant lots lifts property values as well as spirits.

For her study, Wachter, professor of real estate and finance at the Wharton School, focused on the effects of greening in the New Kensington area of Philadelphia.

Philadelphia Green has been working on a land management program there for the past six years, and anecdotal evidence had already pointed to a major impact. Wachter’s study added hard figures that show how investment in greening translates into higher property values. For example, planting a tree within 50 feet of a house, she found, increased its sale price by 9 percent. Neighbors of vacant lots that had been cleaned and greened could expect a rise of 30 percent in their home’s value.

Wachter analyzed data from more than 3,000 property sales in New Kensington from 1980 to 2003, plus records of greening work by PHS and the neighborhood’s community development corporation, work that Wachter had tracked in an earlier project. Other studies had been done on greening investment, but nothing on this scale. What made it possible, she says, is the new technology offered by Wharton’s geographic information system lab, which layers information from many sources into a detailed spatial database.

“Unless you have precise information about where and when trees were planted, it’s difficult to measure local impact precisely,” says Wachter. “You need to have precise geo-coded, time-identified information to do these studies.” And simply noting changes in house prices over time is not particularly useful, either, she says. “It’s just a lot of noise. You have to separate the signal from the noise, and the signal is what’s happened to the price of the same property over time.”

Was Wachter surprised by the results? Such large effects she says, are always surprising. On the other hand, it confirms what she already knew: neighborhoods matter to the people who live in them. “People can control their internal space, but they can’t control the external space because of the nature of urban environments,” where space is separately owned by many people. “So to have a neighborhood that’s hopeful and promising can make a very big difference.”

Originally published on February 24, 2005