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Walkability increases property value

A new study reveals that property values increases when every day needs can be met by simply taking a walk.

This study was done by  Christopher B. Leinberger and Mariela Alfonzo, a Brookings Institution study. The study measures values of commercial and residential real estate in the Washington, D.C., metropolitan area, which includes the surrounding suburbs in Virginia and Maryland.

Until the 1990s, exclusive suburban homes that were accessible only by car cost more, per square foot, than other kinds of American housing. Now, however, these suburbs have become overbuilt, and housing values have fallen. Today, the most valuable real estate lies in walkable urban locations. Many of these now pricey places were slums just 30 years ago.

The research shows that real estate values increase as neighbourhoods became more walkable, where everyday needs, including working, can be met by walking, transit or biking.

According to the report there is a five-step “ladder” of walkability, from least to most walkable. On average, each step up the walkability ladder adds $9 per square foot to annual office rents, $7 per square foot to retail rents, more than $300 per month to apartment rents and nearly $82 per square foot to home values.

As a neighbourhood moves up each step of the five-step walkability ladder, the average household income of those who live there increases some $10,000. People who live in more walkable places tend to earn more, but they also tend to pay a higher percentage of their income for housing.

Although they have not studied all urban areas to the same degree, these findings appear to apply to much of the rest of the United States.

In metropolitan Seattle in 1996, the suburban Redmond area, home to Microsoft, had the same price per square foot as Capitol Hill, a walkable area adjacent to downtown, based on data from Zillow. Today, Capitol Hill is valued nearly 50 percent above Redmond.

In Columbus, Ohio, the highest housing values recorded by Zillow in 1996 were in the suburb of Worthington, where prices were 135 percent higher than in the struggling neighborhood of Short North, adjacent to the city’s center.

Today, Short North housing values are 30 percent higher than those of Worthington, and downtown Columbus has the highest housing values in that metropolitan area.

In the Denver area, Highlands Ranch, an upscale, master-planned community 20 miles south of downtown, had housing in 1996 that cost on average 21 percent more than housing in Highlands, a troubled neighborhood adjacent to downtown Denver. Today, Highlands has a 67 percent price premium over Highlands Ranch.

People are clearly willing to pay more for homes that allow them to walk rather than drive. Biking is part of the picture, too. Biking and walking are part of a “complete streets” strategy that public rights of way should be for all of society — not just cars.

The rise in bike-sharing systems in Minneapolis, metropolitan Washington, and soon New York City makes it possible to imagine a future in which a third of a city’s population gets around primarily by bicycle. The popular Web site Walk Score has just added Bike Score to let people know which neighborhoods are most bikeable.

Demand for walkable urban space extends beyond city centers to suburbs; in metropolitan Washington, more than half of the walkable places are in the suburbs, like Reston Town Center, 22 miles from downtown Washington; Ballston, in Arlington County; and Silver Spring, in suburban Maryland. Residents can easily get to grocery stores, cafes, libraries and work by rail transit, biking and walking.

The question we ask is whether the same applies for South Africa. The increase in property value in and around Gautrain stations suggests that maybe this is true.

The same can be said for property in Braamfontein, which has seen many properties being turned into studio apartments or shops for young urbanites.

Do you think that this is true for South African properties? Leave us a comment with your opinion.

(Statistics sourced from original article published in the New York Times)


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