One of the factors that seems to be propelling the resurgence of cities around the nation is the growing demand for housing in walkable locations. One of the best sources of evidence of the value of walkability is home values, and some new evidence confirms that walkability adds to home values, and also shows that walkable homes have held and increased their value more even in turbulent real estate markets.
The latest insight on this question comes from a new book, Zillow Talk, by Zillow’s CEO Spencer Rascoff and Chief Economist, Stan Humphries, explain what they call “The New Rules of Real Estate.” Zillow has emerged as one of the leading web-based real estate information companies, tracking the sales of millions of housing units around the country, and building sophisticated econometric models to provide regularly updated “Zestimates” of the likely sales price of almost all of the nation’s housing.
We’re big fans of Zillow’s work – and its data, which they’ve made freely available on their website – its a terrific resource for tracking important trends in local housing markets. We used it, for example, to look at the growth of prices in close-in urban neighborhoods in Portland relative to houses in surrounding suburban counties.
There’s a lot to read about in Zillow Talk – you can learn about the best time to sell your home, clever pricing strategies, and which descriptors tend to drive consumer interest. But our attention was drawn to Chapter 23, which explores the question: “What’s Walkability Worth?” The authors use Zillow’s copious data about home prices coupled with Walk Score’s measure of walkability to estimate how improving access to walkable destinations affects a home’s market price. (Walk Score is the innovative web-based tool for measuring the walkability of homes and apartments assigns a score from zero to 100 representing the proximity to common destinations like stores, parks, schools and restaurants.)
Zillow Talk estimated the effect of a 15 point improvement in walkability on Walk Score’s hundred-point scale across a number of metropolitan markets. They found that a 15 point increase in walkability would increase home values by an average of about 12 percent, with the actual values ranging between 4 and 24 percent depending on the metropolitan area. Chicago had the greatest effect of increases in walkability, and New York the least. The author’s also found that the positive effects of an increased walk score weren’t felt in car dependent neighborhoods.
Zillow Talk tracked home values in several major markets from 2000 through 2014, and reported average sales values for the most walkable neighborhoods (“Walker’s Paradise” and “Very Walkable”) and the less walkable places (“Somewhat Walkable” and “Car Dependent.”) In every market they examined, home values in more walkable neighborhoods outperformed those in less walkable neighborhoods in the same market – particularly in recent years. In New York and Chicago, for example, homes in the most walkable neighborhoods increased in value 160 percent more than homes in car-dependent neighborhoods. Even though all these neighborhoods and markets showed the effects on the housing market cycle (with declines after 2006), Rascoff and Humphries report that more walkable areas are more resilient: they recovered their values faster after the collapse of the housing bubble.
The findings presented in Zillow Talk confirm my own earlier work examining the connection between walkability and market values. In 2009, I published a study for CEOs for Cities – Walking the Walk – that used home sales data from 15 markets to assess the impact of walkability on home values. I found that after controlling for the effect of home size, age, number of bedrooms and bathrooms, the overall income of the neighborhood, and its proximity to the region’s urban center and to employment opportunities, that walkability had a significant impact on home values in 13 of the 15 markets we studied. On average, in the markets we examined, going from an average level of walkability to an above average level (from the market median to the 75th percentile) was associated with a $10,000 to $30,000 increase in home values.
For those of us interested in urban places and walkability, Zillow’s data shows that walkability is a major contributor to housing values in urban locations and that houses with high levels of walkability, as measured by Walk Score, have maintained and increased their value relative to housing in car-dependent locations. This is clear evidence that consumers attach major economic value to walkability.