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Saturday, March 8, 2008

The Temple Effect

The idea that a temple will raise the value of all residential real estate within close proximity is called "the temple effect." The location of future temples is a heavily guarded secret because of this very effect. Imagine the real estate speculation that would happen if news of a future temple site were to be leaked to the public. This is a case of simple supply and demand economics. The supply is few. Not every LDS follower can live right next to a temple. However, most of the devout LDS population want to live as close as possible. This high demand and limited supply drives prices of nearby real estate up. While this is simple in theory, it can be more complicated with varying circumstances. The size of the temple, its topographical location, and the demographics surrounding the location are all variables.

The Oquirrh temple will be about 60,000 sq. feet and will reach a height of 183 feet. As LDS temples go this particular one is right in the middle for size. But considering the outstanding spot that the temple was placed in, you will be able to see it for miles around. Unlike the Salt Lake Temple, the Oquirrh Temple is located literally within yards of residents at Daybreak. With the lake, parks, and distinct architecture that Daybreak has to offer, you have a recipe for a literal boom town of value appreciation. Whether the market goes up or down in the next few years, those houses that are between the temple and the lake, especially on the promenade, will be sold for a premium in the future.

Ken Edmunds, a Mormon developer of a 49-unit subdivision near Twin Falls' new temple, paid a premium for his land. When asked about it he said,

"In my mind, it was an economic cycle-proof development. And that was proven out."

An actual study has been done about the temple effect. This study focused on temples being built in areas that do not have a dense LDS population, but found that the value of the homes increased all the same. The study was conducted by Steven J. Danderson and can be found at This study used rigorous economic and real estate models in their scientific investigation. Of course most of the appreciation of value has already been realized, but long-term appreciation effects and cycle-proofing are benefits that will endure.

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