Age Restriction and Property Values

Abstract

This study finds evidence of an age restriction premium that is maintained over time and across varying market conditions. Prior research has demonstrated that the reduced uncertainty associated with private covenants and deed restrictions can be capitalized into value. Age-restricted subdivisions provide a measure of certainty that future property owners must meet the same threshold age requirement satisfied by current owners. The evidence presented here is that this enhanced certainty is capitalized into property values, independent of the structural characteristics of individual units or subdivision amenities. Proposed federal regulations for age-restricted projects created uncertainty for several years in lower priced subdivisions that might not have met the new minimum quality standards. However, there is no evidence that this uncertainty impacted house prices.

Keywords: age restriction, property value, threshold age

JEL Classification: R31