Somebody asked me the following question the other day and I figured I’d post a response here.
Q: Could a location near a water tower impact market value for a home?
A: Maybe. Sometimes water towers are quite large and the typical buyer may not want to live right next to the tower. Let’s face it, some buyers simply wouldn’t want to look at an enormous tower every day, so they’d steer clear of such a location. If this was the case and most buyers felt that way, then there could be an impact on market value. On the other hand, there may be other buyers who would be unaffected by a water tower, or evidence to suggest that such a location makes no difference at all.
There is not a hard-and-fast water tower rule for appraisers to follow. There is no specific “water tower adjustment” that appraisers make in reports. An adjustment in an appraisal report would really depend on what data in the specific market was saying. Any adjustment should be based on the reaction in the marketplace. Is there any evidence in the market that buyers are willing to pay less or more based on the location of a water tower? How do the most recent sales surrounding the water tower compare with sales further away? Does data show that there is really little to no impact on value?
Market conditions certainly play into the equation here too. If there is a vast oversupply of properties listed in the market, chances are someone might look to other listings first that maybe had a more typical view. However, in a market with very limited available properties, buyers may feel less concerned about such an issue and not consider a view of a water tower as a negative. After all, in a hot market with few properties to choose from, buyers tend to more easily overlook locational challenges (busy street, backs to commercial, located next to major fixer…) and even condition issues.
I don’t mean to be frustrating, but there is not really a straightforward end-all answer to the question that was posed to me. The answer really depends on your specific real estate market and what data in your local market says. My knee-jerk reaction is that most buyers would probably prefer to not live next to a water tower, but then again, it really comes down to what the data says because sometimes a real estate market is surprising and things that we think would make a difference in value don’t carry as much weight as we think (or none).
If you have any firsthand experience with a property near or next to a water tower, I’d be curious to hear what you have to say. Have you ever intentionally purchased a property near a water tower or away from one? Did you purchase a property near a water tower only to regret it later on? Is it just not a big deal for you at all? Feel free to comment.
www.SacramentoAppraisalBlog.com Question: Could a location near a water tower impact market value for a home?