Gas wells, property values

Realtors divided over potential impacts

By FRITZ MAYER

RIVER VALLEY — There is evidence to suggest that the coming of gas wells to other states has had some effect on property values.

But, according to interviews with several realtors in the Upper Delaware Valley, there has not yet been much downward pressure on residential home prices because of the signing of gas leases, though some skittishness is reported on the part of buyers. On the other hand, there has been an effect on the value of large parcels of land.

Paul Meagher Sr., co-owner of Re/Max of Wayne County, PA, said that on parcels ranging from 10 acres and higher in northern Wayne County, where landowners have signed more than 1,400 gas leases, gas-well speculation has had a large impact on values, raising them significantly higher than they had previously been.

David Knudsen, an associate broker with Catskills Buyers Agency in Sullivan County, NY, said that some investors have expressed interest in investing in larger parcels in Sullivan County, with an eye toward signing gas leases. But when investors discover that land here sells for $5,000 to $10,000 per acre, and that gas companies are offering $2,500 per acre as a signing bonus, the interest wanes.

The experience of smaller property owners in other states has been mixed. In Fort Worth, TX, for instance, where drilling rigs have arisen within 600 feet of homes in developments, homeowners have complained that property values have dropped 10 percent or more, and that banks are cautious about providing mortgages on homes that are close to drill sites. In other areas, such as Rifle, CO, the coming of many gas wells and an expanding workforce has put upward pressure on housing prices and caused the market to rise.

Local real estate professionals here seem to be in general agreement that it’s too early to tell what the ultimate effect will be in the Upper Delaware Valley, though some are more concerned than others.

Meagher said, “I don’t see where it has affected the residential properties that much.”

Gerald Euker, owner of Eagle Valley Realty in Narrowsburg, NY, said he hasn’t seen any impact yet on real estate prices in the river valley. Of the future of real estate, he said, “I don’t think the sky is falling.” He added that if there is a lot of drilling activity, local real estate professionals will become more oriented toward primary residences and less focused on the second-home market.

Knudsen is not nearly so sanguine. He said that in the past few weeks, customers have started asking questions about gas wells the way they used to ask about the possible coming of casino gambling. He attributed the development to recent reports in The New York Times and on National Public Radio. He also said he’s getting calls from people who already own second homes here who are “concerned would be the gentle word; freaking out would be the less gentle word.” He said that while it’s still too early to tell, the situation may turn out to be similar to the one with the New York Regional Interconnection power line, where properties along the proposed route have been “un-sellable,” but with gas drilling the area of land impacted would be much larger.

Stephanie Turner, owner of Turner Realty based in Glen Spey, NY, said most of her clients are from Manhattan and they are a seeking a refuge from the city when buying a second home. She said she feels obligated to tell her customers about the possibilities of gas drilling coming to the area, and when they find out, they generally stop looking in the area. She also said the uncertainty about the gas well impacts has a negative impact on the market.

But the prospect of gas drilling may also have the effect of tempting some landowners to hold onto their property because of the prospect that it will go up in value. Linda McKean, owner of McKean Realty in White Lake, NY, said that she recently had a seller who walked away from a full-price offer because the buyer would not agree to allow the seller to retain the mineral rights.