Tuesday, August 24, 2010

Could Walkability Increase the Value of Your House?

When you think about the value of your home, or how much you would pay for a home, you generally think of terms such as size, quality and supply & demand. But would you consider walkability affecting housing prices?

A service called Walkscore (currently only in the US) could change the way we think about house prices in the future.

Walkscore calculates the walkability of a neighborhood or location. It uses a 100-point scale (0 = car dependent to 100 = most walkable) and measures and reflects the proximity to, and convenience of having destinations such as schools, libraries, parks and coffee shops within walking distance, as well as the value households attach to mixed-use neighborhoods.

Walk Score ranks 2,508 neighborhoods in the largest 40 U.S. cities to help people find a walkable place to live.

Studies have been performed by the creators of Walkscore which suggests that the walkability of cities translates directly into increases in home values. Homes located in more walkable neighborhoods 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.

Using an economic technique called hedonic regression, the Walkscore service estimates how much market value homebuyers attach to houses with higher Walk Scores. The creators have looked at data for more than 90,000 recent home sales in 15 different markets around the US. Their 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, their study showed a positive correlation between walkability and housing prices in 13 of the 15 housing markets that they 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.

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 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.

We find this forward-thinking way of assessing house prices particularly significant and valuable; being active members of Partners for Liveable Communities, we endeavour to use our skills and knowledge we gain from such organisations and associated research to create great places for people.

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