Raise the Hammer
The Real Estate Investment Network (REIN) has just published an article on the impact of walkability on real estate prices, using walkscore.com walkability scores as a proxy.
If you haven't heard of it, walkscore.com is a Google map mashup that computes a location's walkability (on a scale from 0 to 100) based on the number and variety of destinations within 1.6 kilometres (1 mile).
For example, the corner of Locke Street and Tuckett Street has a walk score of 85, or "Very Walkable - Most errands can be accomplished on foot." In contrast, the corner of Garth Street and Mohawk Road West has a dismal score of 43, or "Car-Dependent - A few amenities are within walking distance".
It's a crude indicator, but for most types of development it actually does a really good job of approximating how walkable a place really is.
It only starts to break down on so-called Edge City land use. For example, if some benighted soul lived right at the corner of Mohawk Road and Upper James, they would perversely enjoy a walk score of 80, or "Very Walkable", due to the proliferation of (car-dependent) destinations within 1.6 km.
Nevertheless, it's as good a comparative walkability barometer as we have right now, and researchers have already taken interest in it.
Surveys of home buyers have consistently found that most people would prefer to live in a walkable neighbourhood, and there appears to be a significant premium in the housing market for homes in walkable surroundings.
A 2009 report by CEOs for Cities [PDF] that looked at 15 US metropolitan areas concluded that for similar homes in different neighbourhoods, each point gain in a property's walk score translates into a mean increase of a little over $1,500.
Housing value correlated with walk score in both "older, denser markets" and "faster growing Sunbelt markets" alike. Some cities, like Chicago, Sacramento and San Francisco, had point gains much higher than $1,500.
In only two markets was the walk score negatively correlated with home value: Las Vegas, Nevada and Bakersfield, California - two uber-sprawl cities.
More recently, a 2012 report [PDF] by the Brookings Institute analyzed walk scores in Washington DC and concluded that more walkable places perform better economically than less walkable places. It also observed a positive correlation between walk score and property values.
Hence why real estate agents are paying attention to the economic value of walkability. Many property listings now include the property's walk score.
Smart cities that have already embraced walkable land use and transportation are doing the best job of attracting new residents, and those residents are doing the best job of creating new employment opportunities.
Meanwhile, cities like Hamilton refuse to give up their postwar planning models where the highest aspiration of the zoning by-law was to separate uses, limit density and make abundant room for automobiles.
Instead of investing in healthy walkable neighbourhood development, we continue to neglect the lower city while building ever-more auto-dependent sprawl housing - exactly the kind of housing that has already stagnated in the US as people move back into cities.
It should come as no surprise that Hamilton's population is growing more slowly than projected while the assessed value of the city's properties continues to stagnate.
Instead of relying on our geographic status as the destination of "drive 'til you qualify" bargain hunting, maybe we should get off the sprawl wagon and try doing what actually works.
By Noted (anonymous) | Posted March 19, 2013 at 17:50:57
There are a number of factors that contribute to walkability that are not part of our algorithm:
•Street design: Sidewalks and safe crossings are essential to walkability. Appropriate automobile speeds, trees, and other features also help.
•Safety from crime and crashes: How much crime is in the neighborhood? How many traffic accidents are there? Are streets well-lit?
•Pedestrian-friendly community design: Are there narrow streets with buildings close to the sidewalk and parking relegated to the back? Are destinations clustered together?
http://www.walkscore.com/how-it-doesnt-work.shtml
By J (registered) | Posted March 19, 2013 at 21:44:24
The next step is to get banks to understand these numbers and start offering walkability indexed mortgages. The more walkable your house is the smaller your transportation expenses, and thus the greater equity you should be able to support.
Also property taxes could be based on location or efficiency rather than property value. The person living in a 30 story condo in Beasley should be paying a tenth the rate of someone in Ancaster. Her load on the road and water systems are tiny in comparison.
By jason (registered) | Posted March 20, 2013 at 02:54:54 in reply to Comment 87367
you're actually suggesting that downtown residents not be forced to subsidize the suburbs?? Good luck.
By Capitalist (anonymous) | Posted March 20, 2013 at 15:58:30
All this walkability is just based on people's personal preference. Many people would rather drive and live in a quiet sub-division (because it is quiet) while others may prefer an area with more amenities.
I live in dt Toronto. I do not own a car (unlike Ryan and Jason) and I walk pretty much everywhere. If I had three kids I would be living in Burlington and driving an SUV - not because I want to but because of the more affordable extra space I need and the carrying of groceries and other stuff.
It is all about preferences and that is reflected in the price of housing.
By Whatevs (anonymous) | Posted March 20, 2013 at 18:32:35 in reply to Comment 87394
I'm beginning to see a pattern with you, Capitalist. You are consistently enamoured of your own preferences and opinions, and indifferent to actual data.
By jason (registered) | Posted March 20, 2013 at 18:50:38 in reply to Comment 87394
It is all about preferences and that is reflected in the price of housing.
Are you sure about that?
2,200 square feet: http://comfree.com/2-storey-for-sale-han...
1,600 square feet, half the lot, no driveway: http://www.realtor.ca/propertyDetails.as...
Both listed at $449,000
Price per square foot isn't even close.
Comment edited by jason on 2013-03-20 18:52:29
By jason (registered) | Posted March 20, 2013 at 19:02:54 in reply to Comment 87401
A couple more. This time, condos.
1,000 square feet:
http://www.realtor.ca/propertyDetails.as...
1,200 square feet: http://www.realtor.ca/propertyDetails.as...
1,200 square feet: http://www.realtor.ca/propertyDetails.as...
I've been saying for months that the big story (still not reported by anyone) is the price per square foot of downtown area homes vs. suburban/Mtn homes. Everyone knows about the massive price spike downtown in the past 5 years, but the price per square foot story would shock old-time, crotchety Hamiltonians.
Comment edited by jason on 2013-03-20 19:03:49
By Capitalist (anonymous) | Posted March 20, 2013 at 20:13:52 in reply to Comment 87400
What part of my statement "It is all about preferences and that is reflected in the price of housing" do you have trouble understanding?
By Oh dear (anonymous) | Posted March 20, 2013 at 23:28:27 in reply to Comment 87404
Oh I understood it, in all of its typically self-besotted, vacuous glory.
By well said (anonymous) | Posted March 21, 2013 at 13:29:20 in reply to Comment 87400
So true. And people of this ilk treat actual data as if it is opinion - if it doesn't fit with their own ideas. They are so blinded by their self-centered outlook that they can't imagine anyone else being any less self centered.
By kevlahan (registered) | Posted March 21, 2013 at 14:33:41 in reply to Comment 87377
Interestingly, last week's Economist advocated a Land Value Tax as a way of encouraging businesses to develop land they own more productively, rather than just sitting on it. The idea was that this would help lift the UK economy out of the recession.
Hamilton would certainly benefit from a land value tax as it would discourage the property speculation that has destroyed large swathes of downtown. This speculation is possible because demolition and deliberately emptying buildings actually lowers the tax rate, often to the point where the carrying cost is close to zero, and a significant profit can be made by using the land as car storage. With a land value tax it would not be possible to hold onto vacant land in the centre of a city for decades at a time.
It would also be fairer to people who live in apartments, who currently pay a much higher effective property tax rate (as part of their rent) than those living in single family homes.
By money (anonymous) | Posted March 21, 2013 at 15:14:12 in reply to Comment 87429
The money needs to be removed from politics. These laws benefit those who use money to make money rather than the majority of people who actually have to work. And these speculators influence politics all the way to the top. As they get richer, their influence expands. Many of these back-asswards tax laws are imposed on us from the province and there's nothing we can do about them municipally.
By Mal (anonymous) | Posted March 21, 2013 at 20:41:52 in reply to Comment 87402
The lower city has some lovely outliers, yes, but on balance, Hamilton Central and Hamilton East appear to be priced about half the market average.
Unless the lower city is filled with shoebox homes, there appears to be a discrepency in valuation.
http://www.rahb.ca/wp-content/uploads/2013/02/RAHB-Market-Activity-for-January1.jpg
By Mal (anonymous) | Posted March 22, 2013 at 13:45:06 in reply to Comment 87459
As would I. Even those who are auto-centric will concede that relative proximity to amenities is a key variable in the whole "location, location, location" real estate maxim.
I'm not sure how you compensate for all the other variables that factor into a closing price, but if your sample was sufficiently large you could embark on some informed guesswork. Proximity to highway access, for example, is doubtless a contributor (this may be why RAHB's Hamilton East numbers appear above those of Hamilton Central).
Unfortunately, the real estate sector is famously predisposed to proprietary information hoarding, so such an exercise would require a fair bit of independent legwork.
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