Weighing in on Scott Madison and Suzanne Budge’s Jan. 24 opinions, supposition exists that property values, as a general rule, have been affected by the recent oil/gas leases. This argument can go either way, as other influences, such as the recuperation from the recession, may be a major factor as well.
Each real estate property is an entity-unto-its-own, affected by its surrounding influences, which most often results in value differentials. Real estate properties are categorized by their “Highest and Best Use” and to continue this discussion we’ll consider just two categories, residential and commercial. Once a residential property starts producing income, its “Highest and Best Use” immediately falls under one of the many commercial categories and will affect the contiguous properties.
Residential property owners look for sites improved by similar surrounding residential structures — most likely they are looking for peace and quiet. Now take one neighbor who discovers oil/gas on his property that he wants to market — this creates activities not consistent with those of the surrounding neighbors. Markets tend to show these potential homeowners will discount their purchase offers for this anomalies.
Studies and analysis by professionals from the appraisal real estate industry need to be employed to determine value differentials for oil/gas leases for individual properties, neighborhoods, town, city, county, etc.
Madison’s unsupported comments appear to be in line with what his industry wants us, the general public, to believe.
Mack Kreizenbeck, retired real estate appraiser, Meridian