Studies Find Negative Impacts In Home Values Near Fracking

This is a compilation of information from recent studies.

Pollution Fears Crush Home Prices Near Fracking Wells


“Properties with private wells suffered a loss in value compared to properties connected to a municipal water system, they found, offsetting gains in value from mineral-rights royalties. The loss varied with distance from the nearest shale-gas well. At 1.5 kilometers, properties with private wells sold for about 10 percent less.

Within 1 km of shale gas wells, properties with private drinking water wells dropped 22 percent in value. Properties connected to public water suffered no losses, but also showed no net gains.

“If you get closer, if you look at the properties that are only 1 km from a shale gas well, then for the ones that are on groundwater we see a 22 percent loss in property values,” Muehlenbachs said, ”and for the ones that have access to pipe water, there’s zero gain, so essentially all of the positive benefits get wiped out by these negative externalities of having this well pad nearby.” Such negative externalities include truck traffic, noise, light, and air pollution”.

New report on the growing evidence of fracking’s negative impacts on property values and local economies

Natural Resources Defense Council

  • “A study published in the Journal of Real Estate Literature found that a majority of people surveyed would decline to buy a home near a fracking site and that people who are willing to buy a home near a fracking site reduced their offers by up to 25
  • An economic analysis of communities in six states found that, despite short-term windfalls, over the long-term “oil and gas specialization is observed to have negative effects on change in per capita income, crime rate and education rate.”
  • Realtors have reported that some potential home buyers won’t look at “anything remotely close to any existing or proposed well sites” and that homes near wellsites “often have to sell at significantly lower prices than when originally purchased” — and that some buyers won’t look at these homes at all, even if they are deeply discounted. Some homes can’t be sold at any price if they are already reported to have contaminated water. In one study, just the possibility of contaminated water decreased property values by an average of 24 percent.
  • At least 39 states allow forced pooling, which gives oil and gas companies the right to extract someone’s oil or gas even if they don’t want to sell it. This is also called “mandatory pooling” or “compulsory integration,” and can force a mineral owner to not only sell their minerals but to be liable for further costs.
  • Banks in various states won’t provide mortgages to properties where mineral rights have been sold. In some cases, a mortgage has been denied when a neighbor has leased, even if the owner of the home for sale has not leased the mineral rights. According to one lender, “gas wells and other structures in nearby lots…can significantly degrade a property’s value” and do not meet underwriting guidelines.
  • Federal institutions (FHA, Fannie Mae, Freddie Mac) all have prohibitions against lending on properties where drilling is taking place or where hazardous materials are stored. A drilling lease on a property financed through one of these agencies would result in a” technical default.” FHA’s guidelines also don’t allow it to finance mortgages where homes are within 300 feet of an active or planned drilling site.
  • Homeowner’s insurance policies generally don’t cover industrial damages. Nationwide Insurance specifically states that it won’t provide coverage for damages related to fracking under General Liability, Truck Cargo, and auto insurance. But often an oil and gas company’s insurance won’t cover damages to a private home, so that the only alternative left is for a homeowner to file a lawsuit”.

Fracking Brings Steep Drops in Home Values in Some Neighborhoods, But Not All

Duke University

“For homeowners who use well-water, nearby shale wells linked to 13.9 percent dip in home values. The study, conducted in Pennsylvania, found that in areas using well water, home prices dropped by an average of $30,1676 when shale drilling occurred within a distance of 1.5 kilometers”.

Assessment of the proposed Ivey site 152nd and York street in Adams County, Colorado

By Dave Ellison P.E., ENV-SP

Homes in the urban areas within the Adams County contact area (0.5 miles) and within site of the proposed Ivey production pad is 1,906 with an average home value of $398,741.00.

According to the studies listed above, home value impacts show a loss of 10% = $39,874.10 to 25% = $99,685.25 on a home valued at $398,741.00.

As of April 2017, the estimated Real Estate Value of the 1,906 homes = $760 million.

A loss in value due to fracking on the 1,906 homes, on the low-end estimate impact of 10% = $76,000,000 and on the high end with a 25% decrease impact = $190,000,000.00.

This is a significant impact on what Adams County will be able to collect on taxable property value.