The REALTOR® Association of Pioneer Valley (RAPV) recently released a research paper put together by the National Association of REALTORs® (NAR) that concluded that there would likely be a decrease in home values if a casino came to the Springfield/West Springfield Area. NAR’s conclusions were based on an analysis of studies performed by others, but other researchers have found that casinos in rural settings have increased home values.
In their paper entitled “Economic Impact of Casinos on Home Prices: A Preliminary Overview”, NAR stated the impact that a casino in the Springfield/West Springfield area would have on property values: “The various studies available suggest that a casino can have between 2 and 10 percent decline in value, with the most credible being a negative 4.6 percent.”
However, as any REALTORs® and real estate investors know, it’s all about location, location, location. Therefore, since the NAR paper looked at other studies regarding the impact of home values in other areas and not the Pioneer Valley specifically, the conclusions drawn by NAR should be taken with a grain of salt. After all, it’s not like NAR claims are infallible. NAR is a trade organization with special interests just like any other, regardless of claims that the regional REALTOR® hasn’t taken an official position on the matter.
“We [RAPV] don’t have an opinion one way or the other.” RAPV President Brian Sears told Masslive.com. “The data is the data.”
But the data of other studies paint a different picture than that of NAR. These studies found that home values in rural areas benefit from a casino, while casinos in urban settings have the opposite effect.
A couple of studies that state that casinos will have a positive effect on home values were criticized by NAR for their methodology. A 2005 study conducted by Harvard University Kennedy School of Government’s Rappaport Institute, which looked at the effects by county, found that median home prices were about 2% higher in counties with a casino than without. “This effect, however, seems to have been concentrated in sparsely populated rural counties.”
Similarly, a 2007 study published in the Journal of Gambling Business and Economics, “The Impacts of Casino Gambling on Housing Markets: A Hedonic Approach”, also found a 2% positive impact on home values. This study observed that: “the positive impacts of casino gambling decline as population density increases.”
Another paper cited in NAR’s report, by the University of Connecticut’s Center for Economic Analysis, looked at the economic effects of Foxwoods in Connecticut. It found that casinos had a positive effect on home values in adjacent towns, which all had lower population density when it was constructed in the 1990’s―Ledyard had a population of less than 15,000, North Stonington had a population of less than 5,000, and Preston had a population of just over 5,000, according to the 1990 census.
Springfield, West Springfield, and Palmer all are in competition for a single casino license for western Massachusetts. According to the most recent census data, Springfield has a population of 153,060; West Springfield has a population of 28,391; and Palmer has a population of 12,140.
Despite predictions to the contrary, we will not know how home prices will be affected until a casino is built. The data isn’t the data when interpretations of the data are subjective. Based on my subjective reading of the available literature, I am betting that Palmer will be the best location for a western Massachusetts casino as it pertains to home values. Palmer is simply less densely populated than West Springfield and Springfield and has a similar population density of that of the area around Foxwoods, which NAR stated, “is frequently cited as a major success story for the introduction of gaming operations in a rural area.” (Foxwoods isn’t vying for a casino in western Massachusetts, but it’s Connecticut casino neighbor, Mohegan Sun, is doing so.)
If you are planning on buying or selling a home in the Pioneer Valley, make your first call to Michael Seward at 413-531-7129.