Can good walking and bicycling facilities increase the value of your home? Perhaps more importantly, can the lack of bike lanes decrease your home’s value?
Or, have you heard replies from engineers, planners, and politicians like “nobody’s asking for it” and “we can’t afford it” in response to pleas for better and safer pedestrian and cycling infrastructure?
They are correct that few are asking for it. Most people aren’t writing emails or showing up at council meetings. What people are doing apparently, is choosing to buy houses in places that do have good cycling and pedestrian infrastructure instead of in places still waiting around for people to ask for it.
This seems to have become apparent in house values over the past few years.
For another project last summer I very quickly rated each of the 76 cities in the metro area based on the ability of residents and workers to comfortably walk or bike to local destinations*. More recently, doing some analysis of housing values across the metro, I wondered how this walking and cycling infrastructure might impact these values.
The fast decline and recovery over the past several years allow us to see changes in value relatively disconnected from the values of the houses themselves and thus provide us a unique opportunity to see how home buyers may value each city.
The red bars below show the change in home values for each of the 76 cities in the Twin Cities Metropolitan Area over the prior three years (thru November 2012) – approximately 31 months of market decline and 5 of recovery.
From a monetary standpoint would you have preferred to own a house or condo in one of the cities towards the left that have lost little value (or, in the case of Edina, gained value), or one towards the right that have lost significant value – a very painful 21.3% in the case of Anoka?
The green bars indicate the relative cycling and pedestrian infrastructure in each of these cities. For reference, Copenhagen or Amsterdam might be about a 20 on this scale, Paris or Munich a 10, so, though a 5 is good, there’s still much room for improvement.
Notice where the cities with better cycling infrastructure are on the chart. The two with the best infrastructure, Edina and Plymouth, have also performed the best in house value over the past three years (and over other periods). All of the suburbs with a cycling infrastructure rating of 4 are in the top third, and those rated 3 are all in the top 50%.
Minneapolis is a bit of an exception, it is rated a relatively high 4 in cycling infrastructure but is ranked 47th in value retention, well in to the bottom 50%. Minneapolis though is a core city which is very different from a suburb and, compared to other core cities, has performed quite well relative to its surrounding suburbs. It is also ranked a top city in the nation for cycling infrastructure. Coincidence?
Looking at the three year change in value, grouped by infrastructure, those with a rating of 5 increased in value by 5.2%, 4’s lost an average of 6.6%, 3’s lost 7.9%, 2’s lost 11%, and 1’s lost 13.2%. That’s interesting.
The presence of cycling infrastructure is, a bit surprisingly, not very dependent on the overall value of housing in a city. Plymouth is 13th in overall house value with an average less than half that of top ranked Orono. Eagan, Chaska, and Maple Grove are right near the middle of the 76 metro cities in overall value yet have relatively good walking and bicycling infrastructure and have done well in value retention.
Walking and bicycling infrastructure also appear to have had greater impact on the change in house values than other factors such as overall house value, distance from the downtowns of Minneapolis or St Paul, or the presence of parks, lakes, sports, or senior living facilities.
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This is far from a thorough econometric analysis. It is enough though to know that there is something to it (and worthy of further research) and to give us a few things to ponder.
What’s important is not necessarily the money. What this quick analysis shows is how people value each city and the choices made by the leaders of these cities. Leaders who are migrating their cities from a car dominant city to a more human-centric community, who are putting in pedestrian and cycling infrastructure, are seeing their cities thrive relative to others. These leaders decided they couldn’t afford not to do this, didn’t wait for people to ask, and realized that, like Amsterdam, they can change. And these are the cities where people are indicating, with their feet and their money, that they want to live.
Notes:
I very quickly analyzed each of the 76 cities that comprise the Twin Cities Metro Area and, on a scale of 1 to 5, assigned each a rating on its local transportation cycling and pedestrian infrastructure. Emphasis was placed on how safely and efficiently residents and workers can bike and walk to local destinations such as shopping, schools, and public transit. This did not include recreational trails that, while nice amenities, didn’t actually go anywhere. Note also that I said I ‘very quickly analyzed’ each – there is considerable room for improvement in these ratings.