Property rights and neighbourhood character

By Eric Crampton 09/10/2014

A real estate parable.

Suppose that, when we bought our house in Khandallah, the realtor told us about a particularly nice feature of our house. A few doors down lived a lovely grandmotherly type who adored young children. She was in her early 50s, independently wealthy with few time commitments, and loved nothing more than helping out with young children. We went to meet her before deciding on buying the house, and she was just as good as the realtor advertised. We bought the house entirely because she would be our neighbour. In fact, we paid a premium for our house because of it.

Over the next couple of years, we became great friends with her. Our kids referred to her as Nana. She picked them up from school every day and, ’cause she loved us just so much, she’d have dinner on the table for us when we’d get home. We’d all eat together before she’d head back to her place after the kids were to bed. Every bit was exactly as the realtor promised: an essential part of the neighbourhood’s character, for us, was that she lived a few doors down. We wouldn’t have bought the place if she weren’t, and we came to rely on her.

Sadly, she was hit by a bus downtown one weekend and her house was then on the market.

An essential part of the neighbourhood character was that this house was occupied by a woman with these characteristics. Since we bought the house with the expectation that that character would be maintained for at least another 20 years, we consequently have a property right in who lives in that house. Only a grandmotherly type who will help us take care of our kids is allowed to buy that house; anything else would fundamentally change the character of the neighbourhood and violate the expectations we had when we bought our house in that neighbourhood.

Seems a pretty ridiculous basis for a property right, doesn’t it?

So why might anybody think they have a property right in whether the neighbour a few doors down turn his property into a set of townhouses?