Landscape Quality and the Price of Single Family Houses

By Mark S. Henry

Clemson, S.C. (March 1, 1999)- The results of this research were similar to an earlier study of Greenville home sales, from 1991 to 1993. That is, for homes with the same square footage and other house characteristics, selling prices were 6% to 7% higher if landscaping quality was judged excellent rather than good. The price premium obtained by upgrading landscaping from average to good was approximately 4% to 5%.

Landscaping services and the associated purchases of turf, plants, shrubs and trees provide new or existing homes with aesthetic surroundings, buffers from noise and nuisances, and climate control through shade and windbreaks. While these functions may have an economic value, the market does not value these landscaping benefits directly. The market capitalizes these benefits into the price people are willing to pay for homes with superior landscaping characteristics.

Like many home improvements, e.g., central air conditioning, the value of superior landscaping is likely to be recovered, at least in part, through added sales price when the house is sold.

Unfortunately, there were few guidelines available to homeowners on the return in sales price that they might expect from added investments in landscaping. The lack of information on the value of landscaping to homeowners may result in either under or over investment in landscaping services. Without information on expected returns from better landscaping, households may be less likely to undertake landscaping investments.

In this study, the contribution of the quality of landscaping to house prices was estimated for a sample of 218 home sales in Greenville, SC, from 1996 to 1997. The estimates were made using regressions of house price on house characteristics, location and landscape quality. In this study, evidence is presented that a hedonic model of housing prices yields reliable estimates of what a homeowner can expect in terms of a higher home sales price from improvements in the quality of the home’s landscaping.

Studies that use statistical controls for house characteristics have found that trees on residential lots improve home sales prices. However, these studies did not include other landscape characteristics that may affect the price of a house. Consequently, the value that is attributed to trees may, in fact, include the contribution of plants, grasses, and other landscape features to house prices.

In an earlier study of home sales in Greenville, benefits of superior landscaping were found to be substantial. Investing in landscaping that transformed a lot from a ‘good’ rating by a local landscaping expert to an ‘excellent’ rating added about 5% to the sales price of homes in the Greenville sample (5). In general, the allowance of 2 to 4% of the home construction cost for general landscaping of the lot seems to be recovered in the future home sales price. The goal of the research described in this study is to provide additional evidence on the returns that homeowners can expect from investments in landscaping activities.

Related Resources:
Landscape Quality and the Price of Single Family Houses