There’s an interesting new wrinkle in the never-ending debate over the Charlottesville Bypass, a project that has been stalled for a year or more while the Federal Highway Administration figures out whether to approve the project or send the Virginia Department of Transportation back to the drawing board, effectively nixing it.
A real estate agent by the name of Bill Tucker wrote a letter in C-Ville Weekly that has bypass foes all abuzz — as well it should, for it raises important points not yet considered in a debate that has seemingly covered every conceivable angle. Here’s how he started the letter:
I am a real estate attorney with over 40 years experience in the Charlottesville-Albemarle marketplace. In the past two years, numerous real estate agents have told me about the decreased property values and loss of sales in the seven neighborhoods affected by the proposed Western Bypass.. … Unfortunately, many Realtors are reluctant to go public for fear of creating further panic in these already affected neighborhoods. Realtors say that houses in these neighborhoods along the proposed Bypass route are losing value and losing it fast.
Currently, I am representing two sellers that are being held hostage by the proposed Bypass and are marketing their homes at significantly discounted prices. I have spent the last five years dealing with numerous distressed properties (short sales and foreclosures), which have already decreased property values throughout our area. Now that we are beginning to see some relief and stabilization from the economic downturn, we are saddled with the negative effect that even the mention of the Bypass is producing in property values.
In all the discussion over the $300 million highway called the Western Bypass—though it does not bypass our growing community—no one has really connected the loss of housing value with a high-speed, 6.2-mile supposed cut-through. As my experience illustrates, we’re losing time, money, and opportunity due to the desire of a handful to force the rest of us to pay a huge amount of money for a highway that doesn’t accomplish its intended goals. Area Realtors appear to be hesitant to bring buyers into the seven affected neighborhoods. These Realtors fear that once the highway is built, their buyers might blame them when their houses are worth even less.
As I have argued in the blog on many an occasion, road and highway projects can create economic value and they can destroy economic value (as measured by the rise and fall of real estate property values). Indeed, landowners looking to enjoy a windfall gain often are the political prime movers behind projects — you need look no further than the Bi-County Parkway in Loudoun and Prince William counties for an example. But the Charlottesville Bypass is remarkable in that it has no such prime movers. I have heard speculation that the project might have a mildly positive impact on commercial property values around the northern terminus, but such an impact, if it exists, does not seem to be stirring anyone to action. The effect on the Bypass upon property values appears to be overwhelmingly negative.
Using Tucker’s numbers, let’s assume that 1,500 homes lose an average of $30,000 each (pick a higher or lower number that suits you) in property value as a result of the bypass cutting through their neighborhoods. That would represent a collective loss of $45 million in property values. That’s only a fraction of the $240-$300 million cost to build the project, but it should be included in any cost-benefit analysis.
When the Return on Investment of the project based on travel-time and traffic-accidents saved is vanishingly small — I guesstimated an ROI of 3.3% in “The Road to Wealth Destruction” nearly two years ago — the destruction of tens of millions of dollars worth of real estate property values could push the net value of the project into negative territory.
— JAB
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