Do Drug Treatment Facilities Really Lower Property Values? Finally, an Answer

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As the opioid crisis rages on, those affected struggle to find treatment. One potential reason? People don’t want rehab centers in their backyards.

The arrival of a substance-abuse treatment center in a new neighborhood can spark protests, heated city hall meetings, and other attempts to block developments. Some homeowners believe the introduction of substance-abuse treatment centers into a neighborhood will also bring crime and other problems that will decrease property value.

But opposition may be unfounded, a study distributed this week by National Bureau for Economic Research found: Substance-abuse disorder centers do not negatively affect property values in areas where they set up shop, the report by researchers at the University of New Mexico and Temple University concluded.

The model created for this paper showed that when adjusted for issues like benefits to surrounding businesses, there is no measurable difference.

“For most people, purchasing a home is the largest financial investment they are going to make in their lives and the most important financial asset they have,” Catherine MacLean, a lead researcher on the paper, said. “So we believe people’s concerns about decreasing property values are valid, but we wanted to test that.”

Past economic models have shown the construction of such centers may decrease values by 3.4% to 4.6%, but the model created for this most recent paper showed that when adjusted for factors like value prior to the center’s introduction and benefits for surrounding businesses, there is no measurable difference. The researchers examined property value between the years of 2003 and 2016 using data from Seattle.

“Suburban residents tend to be very risk averse when it comes to changes in their neighborhoods,” said Igor Popov, chief economist at apartment-search platform ApartmentList. “It’s not unheard of for neighborhood groups to try to block local development of substance-abuse treatment centers, so these residents must feel that these centers negatively affect the local quality of life.”

The opioid crisis costs the U.S. more than $500 billion per year. Inpatient facilities have been proven an effective means of treating substance abuse disorders, but often cannot find locations to build, Maclean said. Only one in 10 patients with drug addiction are able to get treatment, and a commonly stated barrier is not being able to locate a treatment center.

“If ‘not in my backyard’ concerns prevent centers from locating in convenient settings, this sub-optimal location may make it harder for patients to get into treatment and remain in treatment, which will limit our ability as a society to reduce substance abuse disorders,” she said.

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Source: Housing Trends Feed