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New casinos may harm Philadelphia home values
By Ed Goppelt
Monday, 04/03/06
(1144090250804)
Philadelphians who live near a new casino may see a significant drop in the value of their home according to a recent analysis performed by Hallwatch.
Research from the University of Nevada Las Vegas suggests that a typical Philadelphia home owner living within a mile of a casino could see his home's value decline between $9,638 and $2,032, depending on the casino.
Anti-casino web sites such as this one, now defunct, spell out in some detail some of the quality of life issues casinos bring with them. Among those likely to affect property values in Hallwatch's estimation: more litter (think coin cups), vastly increased traffic, and an increase in drunk driving.
| Casino | Total Loss to Community | Homes within one mile | Average Loss Per Home |
|---|---|---|---|
| Riverwalk | $51,554,100 | 5,349 | $9,638 |
| SugarHouse | $53,968,987 | 7,474 | $7,221 |
| Foxwoods | $109,405,454 | 16,508 | $6,627 |
| Pinnacle | $52,213,047 | 10,326 | $5,056 |
| TrumpStreet | $30,565,296 | 15,041 | $2,032 |
The 1998 Nevada study found that nearby homes experienced a 4.6% drop in value when a casino moved into the neighborhood. In an interview with Hallwatch the study's lead author Professor Terrence Clauretie said that not much research has been done on this question.
Using sales data for 2005, Hallwatch applied the Nevada findings to the five casino locations proposed for Philadelphia.
Hallwatch's analysis shows Philadelphia homeowners suffering a massive loss in the value of their homes. South Philadelphia residents within a mile of the Foxwoods casino would lose the most, $109 million; residents of Northwest Philly near the TrumpStreet casino, the least at $30.6 million.
| Casino | Community | Total Loss |
|---|---|---|
| Foxwoods View map |
Queen Village, Bella Vista, Passyunk Square, Whitman, Pennsport, Society Hill (19106, 19147, 19148) | $109,405,454 |
| SugarHouse View map |
Fishtown, Kensington, Northern Liberties (19106, 19122, 19123, 19125) | $53,968,987 |
| Pinnacle View map |
Kensington, Fishtown, Port Richmond (19122, 19123, 19125, 19134) | $52,213,047 |
| Riverwalk View map |
Northern Liberties, Old City, Fishtown (19106, 19122, 19123, 19125) | $51,554,100 |
| TrumpStreet View map |
East Falls, Nicetown, Tioga, Allegheny West, South Germantown (19129, 19132, 19140, 19144) | $30,565,296 |
Part of the reason for the huge losses in value: rather than choosing lightly populated commercial locations where few residents would be impacted, four of the five potential casino propose to build close to Center City. The affected neighborhoods along the I-95 corridor currently enjoy some of the highest residential real estate values in the city.
| Casino | Total Square Footage | Median $ per sq. ft. | Total value |
|---|---|---|---|
| Foxwoods | 20,503,271 | $116 | $2,378,379,436 |
| SugarHouse | 9,859,150 | $119 | $1,173,238,850 |
| Pinnacle | 12,611,847 | $ 90 | $1,135,066,230 |
| Riverwalk | 7,373,298 | $152 | $1,120,741,296 |
| TrumpStreet | 18,984,656 | $ 35 | $664,462,960 |
In addition, some of the would-be casinos have chosen some of Philadelphia's most densely populated areas as the location for their facility. There are 49,715 residents within a mile of the proposed Foxwoods casino and 43,059 in the immediate vicinity of TrumpStreet.
| Casino | Population within one mile |
|---|---|
| Foxwoods | 49,715 |
| TrumpStreet | 43,059 |
| Pinnacle | 28,485 |
| SugarHouse | 23,763 |
| Riverwalk | 16,358 |
Clauretie said a residential neighborhood can expect losses, while a new casino in a commercial area such as the Las Vegas strip will probably have no effect on home values.
Clauretie estimated the residential percentage of the Las Vegas strip to be between 20 and 30%. Satellite photographs of the strip suggest that a commercial buffer of between 2000-5000 feet separates residential neighborhoods from the casinos on the strip.
All five Philadelphia casino applicants are planning to build their casinos less than a block from residential neighborhoods. According to Hallwatch's analysis, TrumpStreet at 82% residences has the most residential impact zone while Riverwalk with 57% residences has the least residential. Clauretie defines a residential area as anything above 50%.
| Casino | Homes within one mile | Total Properties within one mile | Percent Residential |
|---|---|---|---|
| TrumpStreet | 15,041 | 18,286 | 82% |
| Foxwoods | 16,508 | 21,218 | 78% |
| Pinnacle | 10,326 | 14,751 | 70% |
| SugarHouse | 7,474 | 11,825 | 63% |
| Riverwalk | 5,349 | 9,379 | 57% |
While the five casino applicants spent much of their economic impact reports describing the jobs and taxes they will create for Philadelphians, they are largely silent on the question of what effect their new casinos will have on home values.
Of all the applicants, only Foxwoods mentions home values in its economic impact study. In the study prepared by Philadelphia's econsult corporation Foxwoods puts the total value of owner occupied real estate within one mile at $864 million or about $61,000 per house.
According to Hallwatch's data the value of the typical house in the Foxwoods impact area is in fact $145,000. Study author Stephen Mullin told Hallwatch that econsult got its number from the US Census.
Joshua Vincent, Executive Director of the Center for the Study of Economics, said he thought the Nevada study was sound. "I went over what they were regressing," said Vincent. "It's a hell of a sample. 10,000 transactions is great."
Hallwatch asked two casinos to comment on the Nevada study. Trump Director of Corporate Communications Tom Hickey was asked if he could cite any research contradicting the Nevada study. He replied: "There are examples across the country of a variety of trends in property values near casinos which may or may not be a direct effect of the development depending on the case."
Mullin, the author of the Foxwoods impact study, said his firm did not address the effect of the casino on property values because it believes they will go up. "No research," said Mullin. "Just 25 years of watching structural improvements going on, highways etc.--it's our best guess on that."
Whether Philadelphia home values near the casinos will experience a 4.6% decline like Henderson, Nevada remains to be seen. However, one advantage of Clauretie's methodology is that it would permit researchers 3 years from now to calculate the actual loss experienced by Philadelphia home owners due to the casinos.