Book Review walkscore and real estate values

Published on December 20th, 2012 | by Scott Cooney

2

The effect of walkability and bikeability on real estate value

The housing boom and subsequent bust that caused the financial meltdown of 2008 in the U.S. had many origins. I’d argue that a main cause that has not received much attention was America’s commitment to accommodating the car. Urban planning changed radically when, after World War II, cars became the norm in America. No longer were communities planned for people, they were planned for cars.

The results for homeowners have been notable. In 2008, well before the real estate crisis, our sister site Ecolocalizer ran a story about James Howard Kuntzler’s book, which was urging us to imagine a “future without cars”. In it, the author argues that car-based cities that were developed much more recently in America’s history were likely going to face a collapse property value due to decreasing demand and ample supply. What he predicted has held out. Housing prices in Houston, Las Vegas, and Orlando, the three cities specifically called out as examples of unlivable places, have been hit harder than most.

New urbanism, as some call it, holds the promise of a better today for people seeking a better life. Connections with neighbors, the ability to walk or bike to work, proximity to restaurants, clubs, events, and shopping, and a sense of community that simply can’t be found in suburbia all constitute elements of New Urbanism. (check out GreenBuildingElements.com’s description of New Urbanism for more).

For real estate investors, the bubble in 2008 holds another lesson: New Urbanism holds the promise of a better tomorrow. Think about the demographics. Young, educated Americans are increasingly choosing NOT to own a car. Car ownership in the U.S. is declining, while public transit ridership is increasing.

To learn about the concept in a very fun, user-friendly way, Walkscore.com is a great resource. Check it out to see how walkable your neighborhood is. Using a scale of 1 to 100, Walkscore ranks places from car-dependent to “walker’s paradise”. Walkscore has now been around long enough, according to Jeff Speck, author of Walkable City: How Downtown can save America, One Step at a Time, that economists have been able to measure the financial impact of walkscores on housing prices in the multiple listing service (MLS). The effect is clear as day. Every one point in walkability raises real estate value between $500 and $3,000, depending on where you are.

Speck goes further, arguing that demographic trends are only going to continue to create value for real estate investors in walkable neighborhoods:

…the generation raised on Friends is not the only major cohort looking for new places to live. There’s a larger one: the millennials’ parents, the front-end boomers. They are citizens that every city wants–significant personal savings, no schoolkids.

Christopher Leinberger, economist at the Brookings Institute and author of The Option of Urbanism: Investing in a New American Dream, believes that empty nesters want walkability and to leave behind the large empty nest in exchange for a community where they can easily meet their neighbors, meet for coffee, and go for a walk to the store. Think about the empty nesters you know–what life do you think they want? If they’re your loved ones, what life do you want for them? Now think about the economics of all that younger and older money investing in walkable real estate.

Photo from Shutterstock





Tags: , , , , , , ,


About the Author

Scott Cooney (twitter: scottcooney) is an adjunct professor of Sustainability in the MBA program at the University of Hawai'i, green business startup coach, author of Build a Green Small Business: Profitable Ways to Become an Ecopreneur (McGraw-Hill), and developer of the sustainability board game GBO Hawai'i. Scott has started, grown and sold two mission-driven businesses, failed miserably at a third, and is currently in his fourth. Scott's current company has three divisions: a sustainability blog network that includes the world's biggest clean energy website and reached over 5 million readers in December 2013 alone; Pono Home, a turnkey and franchiseable green home consulting service that won entrance into the clean tech incubator known as Energy Excelerator; and Cost of Solar, a solar lead generation service to connect interested homeowners and solar contractors. In his spare time, Scott surfs, plays ultimate frisbee and enjoys a good, long bike ride. Find Scott on



  • http://twitter.com/stateofplaceorg Mariela Alfonzo (@stateofplaceorg)

    You should also take a look at our most recent Brookings work (Chris Leinberger and I were co-authors) released this past May http://bit.ly/JAb9OE that delineates five levels of walkability using a walkability rating and diagnostic system I developed called the State of Place™ index http://bit.ly/NpJ7rA. An increase in one “level” of walkability is tied to increases of about $9/sf in office rents, $7/sf in retail rents, an 80% increase in retail revenues, $80/sf in for-sale home values, and an $300 increase in residential rents. But besides the economic tie-in, using the State of Place™ index, communities can identify their walkability strengths and areas for improvement and customize a strategy to increase their walkability (and rating). Let me know if you have any questions!

  • http://www.greenbusinessowner.com/about/ Scott Cooney

    Hello Mariela,
    This is great! Thanks so much for the info. Having lived in places where walkscore was low (25) and then moving to a walker’s paradise (98), I became a convert and have never looked back. I wish all people had the chance to live in a walkable community, just to experience how much better life is.

    I will definitely take a look at your State of Place index…sounds really fascinating.
    -Scott

Back to Top ↑