Article: Damage to market value and locational premiums.

INTRODUCTION

IN THE REAL ESTATE LITERATURE OF THE PAST DECADE or so confusion has arisen between the concepts of a damage to the market value of a property and a locational premium. Many articles discuss the influence of some alleged negative condition (disamenity) such as powerlines, landfills, railroad tracks, superfund sites, or industrial facilities on the value of nearby properties by comparing their value to the values of similar properties not nearby as if this differential were a damage. This differential, assuming it exists, is properly a locational premium, i.e. the difference a market participant is willing to pay to be further from the alleged ...

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