When an oil pipeline or tanker spills, how many homes are impacted and what do those impacts look like?
Our recently released report How do pipeline spills impact property values? concludes that, although direct contamination certainly hurts a home’s value, even neighbouring areas can expect to lose some value in the aftermath of a spill or other incident.
This is because public perception extends beyond the homes that are directly impacted. Especially if it’s not the first spill or leak along a particular pipeline, the surrounding area’s reputation will suffer.
Three cases of reputational damage highlighted in the report show an average value loss of 5-8% for homes up to a kilometre away from the incident. In Vancouver, where the average price of a home is just over $600,000, this could amount to a loss of $30-40,000.
On the positive side, these losses are generally not permanent and will subside after the first year or two. As urban economist and real estate expert Dr Barton Smith notes, the amount of devaluation that a property sees is related to how recent the incident was, the property’s proximity to the incident and whether it’s a repeat occurrence. Only when a pipeline spills again & again will the value loss become permanent.
However, in a region that employs over 14,000 realtors, many of whom are small business owners, even short-term impacts are worthy of consideration. Statistics from the U.S. show that after a major disaster, a full 25% of small businesses do not re-open afterwards.
As Langley realtor Annabel Young notes, “I have noticed that with the huge amount of negative publicity surrounding the expansion of this pipeline, people are on red alert and are very aware of the potential impacts of the pipeline on their properties. As a result, buyers will typically avoid a property anywhere near a pipeline and this does have a negative impact on values.”