NIMBY, the acronym for "not in my backyard," has made it into the Oxford English Dictionary. More arrived than this, you cannot get, at least not in the world of lexicography.
The principle invokes the idea of what economists call an externality. That’s a use of land or air or any other resource that changes what another person can make of it.
If your neighbour has a magnificent garden and your house overlooks it, then you have a positive externality. If the neighbour keeps a few thousand used tires in his backyard and you see them every time you look out the window, that’s a negative externality.
When it comes to selling or buying a house or condo, the idea of externalities loses some of the clarity the NIMBY principle suggests. The lovely garden may be a negative value to someone with flower allergies or exceptional sensitivity to bee stings.
It’s hard to imagine who would like the sight of old tires, but if the world has orbophiliacs (those who love things that go around), then it could be a positive.
In the housing market, some externalities are planned and priced into new developments.
A cluster of condos or houses on the edge of a golf course takes advantage of, and is a marketing ploy for, those who enjoy the sport or others who like the view of green spaces in summer and lots of tundra in winter. There may be some curmudgeons who don’t give a whit for golf, but they don’t matter if there are enough people who will respond positively to the concept.
Some externalities are almost always negative.
A smelly pond at the end of the street detracts from property values. Houses near swamps or adjacent to filthy factories are hard to sell without huge discounts.
Whether a competing use, such as airplanes shaking your trees on their way to landing, is positive or negative can be a matter of numbers and of spin. Thus the real estate market is filled with name games intended to make some good out of what is bad:
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Phrase: "Convenient to shopping"
Meaning: A regional shopping mall is at your hedge
Phrase: "Near recreational centre"
Meaning: Gun club firing range is next door
Phrase: "Part of a gated community"
Meaning: Prison one block away
Phrase: "Many employment opportunities"
Meaning: Neighbourhood zoned for industry.
Turning a problem into a virtue would be funny if it did not actually happen from time to time. In general, a competing pre-existing use is the buyer’s responsibility to discover.
It’s hard to go to court to get damages for bother from a shopping centre that was thriving before you bought the house next door. The law of nuisance generally says that you should poke around the territory to see what’s doing and, if you don’t, it’s your loss.
When a new and perfectly legal use comes into being after you have bought a property, your home may be worth less. Typically, if you buy a condo with a lovely view of the city and suddenly a new building goes up that converts your view into the glass wall of another tower, you have lost. A change of view could be costly, yet it can work.
A lot of buyers, especially those from Toronto or New York, may find a view of other buildings downright homey.
The neighbourhood that turns from purely residential to mixed retail and condos will appeal to a lot of folks who like the buzz of a little business, some boutiques and a few cafes down the street.
This is perception and spin. Call the new cafes "nightclubs" and you fail to attract families with children. Call them restaurants or something like "smart places to meet" and you may get upscale singles and DINKS (double incomes, no kids).
Neighbourhood decline obviously creates negative externalities. If a street filled with grand mansions too costly to maintain slips into multi-family houses and then rooming houses, the remaining single-family properties lose value.
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Gentrification creates positive externalities.
A group of derelict houses can be bought by a developer who specializes in infill housing. The reconstruction adds value to the property that has been rebuilt and add value to adjacent properties.
The trick for buyers and sellers of homes is to recognize which externalities are priced into a property and which are not.
The golf course setting adds value for many buyers and is probably priced into the adjacent house.
Gentrification about to occur is not likely to be priced into nearby housing. Buying early means the new owner has a free option on an upgrade that someone else will build.
Externalities, apart from those that are downright toxic, are about spin and perception.
The late Marshall McLuhan, the high priest of pop, famously declared that "the medium is the message." In real estate, the implication is that what you call an externality that is positive to some and negative to others can make a huge difference in price and how long it will take to sell your home.
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