Walkability Raises Housing Values, Study Finds

photoCan you walk to stores, schools and a park from your home?  If so, your house or condo may be worth substantially more than those in more isolated, pedestrian-hostile neighborhoods.

That’s the finding of “Walking the Walk: How Walkability Raises Housing Values in U.S. Cities,” a study by Joseph Cortright that analyzed data from 94,000 real estate transactions in 15 major markets provided by ZipRealty and found that in 13 of the 15 markets, higher levels of walkability, as measured by Walk Score, were directly linked to higher home value.

“Even in a turbulent economy, we know that walkability adds value to residential property just as additional square footage, bedrooms, bathrooms and other amenities do,” said Cortright. “It’s clear that consumers assign a tangible value to the convenience factor of living in more walkable places with access to a variety of destinations.”

“These findings are significant for policy makers,” said Carol Coletta, President and CEO of CEOs for Cities, which commissioned the research.  “They tell us that if urban leaders are intentional about developing and redeveloping their cities to make them more walkable, it will not only enhance the local tax base but will also contribute to individual wealth by increasing the value of what is, for most people, their biggest asset.”

The report found, in short, that walkability is more than just a pleasant amenity. Homes located in more walkable neighborhoods—those with a mix of common daily shopping and social destinations within a short distance—command a price premium over otherwise similar homes in less walkable areas. Houses with the above-average levels of walkability command a premium of about $4,000 to $34,000 over houses with just average levels of walkability in the typical metropolitan areas studied.

The report explores the connection between home values and walkability, as measured by the Walk Score algorithm. Walk Score measures the number of typical consumer destinations within walking distance of a house, with scores ranging from 0 (car dependent) to 100 (most walkable).

By the Walk Score measure, walkability is a direct function of how many destinations are located within a short distance (generally between one-quarter mile and one mile of a home). Our measure of walkability reflects the convenience and proximity of having shopping and cultural activities close at hand, as well as the value households attach to mixed-use neighborhoods.

Using an economic technique called hedonic regression, we estimate how much market value homebuyers implicitly attach to houses with higher Walk Scores. We looked at data for more than 90,000 recent home sales in 15 different markets around the nation. Our statistical approach controlled for key characteristics of individual housing units (their size, number of bedrooms and bathrooms, age and other factors), as well as for the neighborhoods in which they were located (including the neighborhood’s income level, proximity to the urban center and relative accessibility to employment opportunities).

After controlling for all of these other factors that are known to influence housing value, our study showed a positive correlation between walkability and housing prices in 13 of the 15 housing markets we studied. In the typical market, an additional one point increase in Walk Score was associated with between a $500 and $3,000 increase in home values. In one market (Las Vegas) there was a negative correlation—housing prices decreased with higher Walk Scores, and in one market (Bakersfield) there was no statistically significant correlation between prices and walkability after controlling for other factors.

These results show that consumers and housing markets attach a positive value to living within easy walking distance of shopping, services, schools and parks, the study’s authors said. The property value premium for walkability seems to be higher in more populous urban areas and those with extensive transit, suggesting that the value gains associated with walkability are greatest when people have real alternatives to living without an automobile.

“This research makes it clear that walkability is strongly associated with higher housing values in nearly all metropolitan areas. The choice, convenience and variety of walkable neighborhoods are reflected in housing markets and are the product of consumer demand for these attributes,” the study concluded. “The nation’s urban leaders should pay close attention to walkability as a key measure of urban vitality and as impetus for public policy that will increase overall property values – a key source of individual wealth and of revenues for cash-strapped governments in a tough economy.”

 

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