Walkable areas cost more, says research

By Amy Hoak
MarketWatch

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CHICAGO — Homes within walking distance of amenities such as schools, parks and shopping aren't only more convenient for owners, often they're worth more than homes in areas where driving is the rule, according to a study released this week.

The report looked at 94,000 real estate transactions in 15 markets. In 13 of the markets, higher levels of "walkability" were directly linked to higher home values.

The report, "Walking the Walk: How Walkability Raises Housing Values in U.S. Cities," was commissioned by CEOs for Cities, a national network of leaders from the civic, business, academic and philanthropic sectors.

It's an important point for home buyers trying to identify which homes will hold their value, said Joseph Cort- right, the report's author and a senior policy adviser to CEOs for Cities. Cortright is an economist and president of Impresa, a Portland, Ore.- based consulting firm.

Walkable places have some of the best chances of performing well in years ahead, he said.

The analysis used transaction data from ZipRealty. It calculated walkability of homes using the Walk Score algorithm, which grades addresses based on nearby amenities, from restaurants and coffee shops to parks and libraries. Scores range from 0 to 100, with 100 being the most walkable; a score higher than 70 indicates it's possible to get around in the area without using a car.

Controlling for factors such as a home's size, the number of bathrooms and bedrooms, age, neighborhood income levels, distance from the central business district, and access to jobs, a one-point increase in Walk Score was linked to a jump in home value of $500 to $3,000, depending on the market, according to the study.

The premium for homes in neighborhoods with above-average Walk Scores ranged from $4,000 to $34,000, according to the report.

But that premium wasn't found everywhere. In Las Vegas, walkability correlated with lower housing values. Bakersfield showed no statistically significant connection between walkability and home prices, according to the study.

It could be that the volume of foreclosures and the macroeconomic trends with which these cities are dealing are overwhelming any positive effects walkability might have on home prices, said Pat Lashinsky, chief executive of ZipRealty.

"The effect is being masked," he said.

Even in areas where walkability does statistically matter, the premium it affords isn't the same from place to place. Dense urban areas such as Chicago and San Francisco showed higher price gains based on higher Walk Scores; in less dense markets such as Tucson and Fresno, home prices didn't jump as much because of higher walkability.

Other metropolitan areas included in the study were: Arlington, Va.; Austin, Texas; Charlotte, N.C.; Dallas, Texas; Jacksonville, Fla.; Phoenix, Ariz.; Sacramento; Seattle, Wash.; and Stockton.

Matt Lerner, chief technology officer of Front Seat, the software company behind Walk Score, said his firm emphasizes how walking rather than driving can play a part in preventing global warming and how people who live in walkable areas weigh 7 pounds less, on average, than those who don't. Places with higher Walk Scores also often have better mass transit services, according to the report.

This study, however, puts the focus squarely on housing values.

"I don't know of any other study that has put a dollar value on walkability," he said.

While convenience does play a roll in the desirability of walkable neighborhoods, consumers still haven't forgotten the days of $4-a-gallon gas, influencing where they want to buy a home, Lashinsky said.

"When people are looking to buy a house now, they know in the back of their mind that there is a risk that gas prices can be higher than they are right now," Cortright said.

"This is not about people having to live without cars." Rather, it's about giving people the option to use them less often.

"They don't need to use them for every single trip, and when they do have to, they don't have to drive as far," he said.