CITY OF SAN LUIS OBISPO 2006 - 2013

DETERMINANTS OF APPRAISED HOME VALUE

MIKE GIBBONSGIS 457: FINAL PROJECT

WINTER 2016CAL POLY, SAN LUIS OBISPO

CONTEXTCradled by the rolling hills and gorgeous Santa Lucia Mountains of the Edna Valley, the City of San Luis Obispo, California attracts residents with its superb year-round weather and small-town friendliness. In recent years the area has been an ideal setting for a 21st-century Wine Country lifestyle and was even named the Happiest City in America. The acclaimed vineyards of the valley and proximity to the ocean share the area’s pastoral byways with charming inns, fine restaurants, inviting shops, art galleries, and cafes. Altogether, the region is an increasingly recognized tourist destination.

San Luis Obispo lies close to the picturesque communities of Paso Robles, Templeton, Avila Beach, Pismo Beach, and Santa Maria, and within eas commuting distance of Santa Barbara (Figure 1). The location offers a vast array of commercial and recreational opportunities to both residents of the city and of neighboring communities.

In recent years the City has received much criticism of its extremely high cost of living and high housing costs. To get a better understanding of this phenomenon, it is important to analyze that context in which homes in San Luis Obispo are found.

Using ArcGIS and various data sources, an analysis will be made to see if there is any correlation between appraised home values and proximity to: 1) Streams, 2) Open Space, 3) Historic Districts, 4) Commercial Zones, and 5). Office/Business Park Zones.

FIGURE 1: State and regional loca-tion of San Luis Obispo, CA

2

3

STREAMS

OPEN SPACE

HISTORIC DISTRICT

COMMERCIAL

OFFICE

ANALYSIS & METHODOLOGYTo better understand the housing market in San Luis Obispo, an analysis was conducted to determine if proximity to physical and natural attributes has a significant impact on appraised home values. The attributes that were analyzed were: streams, open space, historic district, commercial zones, and office zones. Using GIS, homes that were within 1/32, 1/16, 1/8, and 1/6 were examined to determine their average price per square foot. Those home values were then compared to the average home value per square foot in San Luis Obispo of all the homes that were appraised in that given year. For this particular project, all homes that were appraised between 2013 and 2006 were examined. It is important to note that appraised home values were examined instead of sale prices of homes because sales prices tend to be very subjective.

After conducted a multitude of observations and compiling data, a second analysis was done to

determine at which distance to the given attribute is price per square foot worth more, and at which distance is home value no longer affected. Both the physical and natural attributes, and the distances that were selected for this project were specifically chosen due to the relative walkability and the multitude of the attributes selected in and around San Luis Obispo. The results were quite interesting and shed some light on what attributes increase and decrease home values.

CASE STUDY: HISTORIC DISTRICTSan Luis Obispo has two distinct Historic Districts as defined in Cities Zoning Map. These historic zones are located in and around the downtown core. Between 2006 and 2013, 3,069 homes were appraised. Of those 3,069 homes, 610 were within 1/6 mile of the designated Historic District’s. Figure 2 shows all homes that were analyzed between 2006 and 2013. Interestingly enough, between these years all homes that were within 1/32 of a mile of a historic district were worth considerably less ($62.21) than the average price per-square-foot of all homes in San Luis Obispo ($81.33). As Table 1 depicts, the further a home is located from the district the price per-square-foot increase dramatically. From the observations conducted, it appears that homes price per-square-foot are highest ($107.86) when the homes are located 1/8 mile (660 feet) of more away from a Historic District than the average price per-square-foot of all homes in San Luis Obispo that

were appraised between 2006 and 2013 ($81.33).

Overall, despite the homes that were within 1/32 mile of a Historic District, the average price of all appraised homes that were within 1/6 mile was $89.76—a total of $8.43 more than the average price of all homes appraised between 2006 and 2013 (Table 2).

TABLE 2: Average price per SF of homes within the specific distance of attribute. Yellow represents price per SF that was lower than the average price per SF of all homes appraised during 2006 through 2013. Green represents an increase price per SF when compared to the average of all homes appraised in 2006 through 2013. TABLE 1: Average price per SF of all homes within 1/32, 1/16,

1/8, and 1/6 of a mile of a Historic District between the years 2006 and 2013. Darker colored cells represent a higher value per SF, and lighter colored cells represent a lower value per SF.

FIGURE 2: All homes that were appraised between 2006 and 2013 that are within 1/32, 1/16/, 1/8, and 1/6 mile of a Historic District.

4

5

TABLE 3: Average price per SF of all homes within 1/32, 1/16, 1/8, and 1/6 of a mile of a Commercail/Retail Zone between the years 2006 and 2013. Darker colored cells represent a higher value per SF, and lighter colored cells represent a lower value per SF.

CASE STUDY: COMMERCAIL / RETAIL ZONESan Luis Obispo is unique in that in addition to its big box retail stores (i.e. Target, Home Depot, and Costco), a large percentage of the commercial establishments are family owned and business and boutique style stores. As can be seen from FIGURE 3, Commercial Zones are scattered throughout the City. Because Commercial is such a large land use throughout the City, it is not surprising that many homes are located near Commercial Zones. As with the Historic District analysis, between these years all homes that were within 1/32 of a mile of a Commercial Zone were worth less ($79.95) than the average price per-square-foot of all homes in San Luis Obispo ($81.33). As can be seen in Table 3, homes price per-square-foot are highest ($93.19)—less than that of homes 1/8 of a mile away from Historic Districts—when the homes are located 1/8 mile (660 feet) of more away from a Commercial Zone than the average price per-square-foot of all homes in San

Luis Obispo that were appraised between 2006 and 2013 ($81.33).In total, homes that were within 1/32 of a mile of a commercial zone were worth less per-square-foot than homes that were over 1/16 away (TABLE 4). According to the observations, homes that are 1/8 of a mile away from a Commercial Zone were worth more than those further or closer to the zone. Overall, being located with 1/6 mile of a Commercial Zone appears to have increase property value on homes that were appraised between 2006 and 2013.

TABLE 4: Yellow represents price per SF that was lower than the average price per SF of all homes appraised. Green represents an in-crease price per SF when compared to the average of all homes

FIGURE 3: All homes that were appraised between 2006 and 2013 that are within 1/32, 1/16/, 1/8, and 1/6 mile of a Commercial Zone.

6

FIGURE 4: All homes that were appraised between 2006 and 2013 that are within 1/32, 1/16/, 1/8, and 1/6 mile of a Office or Business Park Zone.

CASE STUDY: OFFICE ZONE While Business Parks and Office are probably not the most notable land use and zone that San Luis Obispo has, it actually takes up a good deal of land inside the City. As can be seen from FIGURE 4, Office/Business Park Zones are scattered throughout the City. Interestingly enough, there is a fair amount of housing that is actually located near this zone. In fact, between 2006 and 2013, a total of 1,070 homes were appraised that were within in at least 1/6 of a mile of Office/Business Park Zones. Unlike the other attributes that were analyzed, the closer a home is to a Office/Business Park Zone, the price per-square-foot increase (FIGURE 4). Take for example 2009, where the average price per-square-foot of all homes appraised that year that were within 1/32 mile of an Office Zone was $172.00 per SF (a $69.38 difference in price).

Overall, as can be seen from Table 6, properties that are within 1/32, 1/16, 1/8, and 1/6 of a mile of

Office/Business Zones in between 2006 and 2013 are worth ~20% more than the average price per square foot ($81.33) of all homes in San Luis Obispo. Additionally, it appears from the findings that homes within 1/32 mile of Office/Business Park Zone are more valuable than any other distance (Table 6).

TABLE 6: Average price per SF of homes within the specific distance of attribute. Yellow represents price per SF that was lower than the average price per SF of all homes appraised during 2006 through 2013. Green represents an increase price per SF when compared to the average of all homes appraised in 2006 through 2013.

TABLE 5: Average price per SF of all homes within 1/32, 1/16, 1/8, and 1/6 of a mile of a Commercail/Retail Zone between the years 2006 and 2013. Darker colored cells represent a higher value per SF, and lighter colored cells represent a lower value per SF.

7

CONCLUSION

TABLE 7: Overall average of price per-square-foot of homes that were found in each attribute between the years 2006 and 2013. Yellow represents price per SF that was lower than the average price per SF of all homes appraised during 2006 through 2013. Green represents an increase price per SF when compared to the average of all homes appraised in 2006 through 2013.

After conducting numerous observations, the results that were found were quite interesting. It appears that homes that are within 1/6 of a mile of Streams tended to be ~2% higher in price per-square-foot than all other homes in the City appraised that year. Also, homes that were within 1/6 of a mile of a Historic District were worth ~10% per-square-foot than the average home in San Luis Obispo. By far the most surprising result was the property value of homes that are located next to designated Open Space. According to the findings, homes that were located

within 1/6 of a mile of Open Space are worth ~3% less than all other homes that were appraised in San Luis Obispo between 2006 and 2013.

The following findings allow both home buyers and real-estate investors to get a better idea of what homes are worth more than others and what homes may be worth more in the future.

FIGURE 5: Map showing all the attributest that were analyzed and their location within the San Luis Obispo City Limits.