People who love cities have known for years what the rest of the country is just starting to figure out: urban life is a beautiful thing. But even city lovers may be surprised at the premium home buyers place on urban living.
A new study from CEOs for Cities to be released this week shows that homes in close proximity to multiple destinations, such as stores, libraries, parks, coffee shops, restaurants, are more valuable than similar homes in neighborhoods where there is less to walk to, pointing to a bright spot in the residential real estate market.
The report, "Walking the Walk: How Walkability Raises Housing Values in U.S. Cities" by Portland, Oregon economist Joseph Cortright, analyzed data from 94,000 real estate transactions in 15 major markets and found that in 13 of the 15 markets, higher levels of walkability, as measured by Walk Score, were directly linked to higher home values. (If you are not familiar with Walk Score, it calculates the closest amenities to an address, then assigns a "Walk Score" from 0–100, with 100 being the most walkable and 0 being totally car-dependent. Walk Scores of 70 or more indicate neighborhoods where it's possible to live without a car.)
"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."
Here's an example of the effect of walkability on housing values from Charlotte, North Carolina: The Ashley Park neighborhood has a typical Walk Score of 54, and the median home price is $280,000. In the Wilmore neighborhood- above average Walk Score 71-an otherwise similar home would be valued at $314,000. Controlling for all other factors including size, number of bedrooms and bathrooms, age, neighborhood income levels, distance from the central business district and access to jobs, if you were to pick up that house in Ashley Park, and place it in more walkable Wilmore, it would increase in value by $34,000 or 12 percent, Cortright said.
In the typical metropolitan areas studied, the premium for neighborhoods with above average Walk Scores compared to those with average Walk Scores ranged from $4,000 to $34,000, depending on the metro area. That's big money for both homeowners and cash-strapped local governments trying to figure out how to stave off falling property values (and falling tax revenues).
A number of trends are reshaping the American Dream, and the value home buyers now place in urban neighborhoods is clearly one of the most important. Now, planning, zoning and development decisions have to catch up to consumers.
You can listen to an interview with report author Joe Cortright on Smart City here.
Carol Coletta is the President and CEO of CEOs for Cities, and the host of the nationally-syndicated public radio show, Smart City.