I wrote the above post last year in response to a potential client’s query, and also because I know this – walkable neighborhoods are more valuable to a large segment of the Charlottesville real estate market.
One thing that consistently needs definition is this – what is walkable to you? For some, it’s five minutes, to others (frequently those from other countries in my experience) under thirty minutes comprises “walking distance.”
In this vein, the question of “what does biking distance” mean to you? (and are there bike lanes?)
Along come this study that –
All of these prior studies suggest that walkability could well produce higher property values. If demand for walkable places is growing and currently exceeds supply, if homes in new neighborhoods designed to promote walking sell at a premium, if access to schools, banks and shopping increase office and apartment rents, and if land use mixing increases property values, then it seems reasonable to hypothesize that walkability improves rents and values. But properties which produce more income at any given point in time will not automatically generate higher investment returns if the higher income was already expected when the property was acquired and purchased at a price that reflects that expectation. Assuming the same risk, for actual (ex post) returns to be higher for walkable properties, income would have to be higher than was expected when the property was acquired or appraised. This is because property values are generally a function of expected earnings, given a certain level of risk.If income for walkable properties was higher than expected, they would have generated higher income returns. And if walkable properties appreciated more than was expected, due to faster than expected income growth or a decline in perceived relative risk, they would have generated higher appreciation returns.…So, the effects of walkability on property values and incomes on the one hand and investment returns on the other must be considered as two separate questions. Values will be higher if there are benefits from walkability that are capitalized into property prices. Returns will be higher if incomes or appreciation are larger than were expected when walkable properties were appraised or acquired.Based on this review, we concluded that walkability may well be producing benefits that are reflected in higher market values and incomes. We also suspected that a shift may be occurring in the marketplace in favor of more walkable places which has not been fully anticipated by investors or appraisers. Therefore, we hypothesized that walkable properties have been valued as much or more and produced investment returns as good as or better than other more auto-oriented real estate.
As often happens, the responses from my post earlier this week garnered some insightful and relevant responses – one of my favorite being:
Practically, I was showing two older houses in Albemarle County this week the day after I read this story. Both were similar in many ways, and the major differentiator was location … coincidentally the asking price differential was $30,000.
Being “close to stuff” matters. Certainly not for everybody, but I’d argue that, for a larger segment of the population than we’ve seen in 50+ years, the following paragraph is applicable and relevant. (Once again, bolding mine)
There are two additional conclusions suggested by the literature. One is that once the mix of nonresidential uses exceeds a certain level in an area, the disamenities effects may begin to dominate. The other is that some non-residential uses, such as retail, parks, and offices, tend to have a more favorable impact on single family values compared to apartments and industrial uses. It seems logical to expect that both the precise amount and the specific mix of uses in an area can affect property values. Moreover, each type of property may differ in how it responds to different amounts and types of other uses. For example, shops and parks and restaurants may benefit residents in homes and apartments and workers in non-residential properties, while industrial uses may always do best when located away from homes and shopping. A search for such “optimum blends” has not been conducted by researchers so far, but it is logical to expect specific uses to benefit most from proximity to a specific amount and mix of other uses.
I’m thinking that homes in Belmont, Hollymead, JPA, Downtown Crozet, Old Trail in Crozet, the (soon-to-be-former) Martha Jefferson neighborhood, Johnson Village are eminently walkable … what would you add?*
* I would love to be able to search by lifestyle …. and I’m wondering how applicable/relevevant/accurage Onboard Informatics’ lifestyle search engine would be in the Charlottesville and Albemarle areas.
As an aside, I mentioned this study earlier this week on my Posterous blog …. I post some interesting stuff there from time to time before things make it here.