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Aug 18, 2009, 12:01 a.m. EST
Walk appeal
Homes in walkable neighborhoods sell for more: study
By Amy Hoak, MarketWatch
CHICAGO (MarketWatch) -- Homes located within walking distance of amenities such as schools, parks and shopping aren't only more convenient for their owners, often they're also worth more than homes in neighborhoods where driving is the rule, according to a new study released Tuesday.
The report looked at 94,000 real-estate transactions in 15 markets. In 13 of those markets, higher levels of "walkability" were directly linked to higher home values.
The report, "Walking the Walk: How Walkability Raises Housing Values in U.S. Cities," was commissioned by CEOs for Cities, a national network of urban leaders from the civic, business, academic and philanthropic sectors.
It's an important point for home-buyers who are trying to identify which homes will hold their value, said Joseph Cortright, the report's author and a senior policy adviser to CEOs for Cities. Cortright is an economist and president of Impresa, a Portland, Ore.-based consulting firm.
Walkable places have some of the best chances of performing well in years ahead, he said.
The analysis used transaction information from ZipRealty. It calculated walkability of the homes using the Walk Score algorithm, which grades addresses based on amenities that are nearby, from restaurants and coffee shops to parks and libraries. Scores range from 0 to 100, with 100 being the most walkable; a score higher than 70 indicates it's possible to get around in the area without using a car.
Controlling for other factors including a home's size, the number of bathrooms and bedrooms, age, neighborhood income levels, distance from the Central Business District and access to jobs, the study found that a one-point increase in Walk Score is linked to an increase in home value between $500 and $3,000, depending on the market, according to the study.
The premium for homes in neighborhoods with above-average Walk Scores ranged from $4,000 to $34,000, according to the report.
Exceptions to the rule
But that premium wasn't found everywhere. In Las Vegas, walkability correlated with lower housing values. Bakersfield, Calif., showed no statistically significant connection between walkability and home prices, according to the study. The report didn't investigate why homes in walkable neighborhoods didn't bring a premium in those two places.
http://www.marketwatch.com/story/hom...ore-2009-08-18
(Site Bonus: Video tour of Bill Gross's new California digs. Whoppee!)
Walk appeal
Homes in walkable neighborhoods sell for more: study
By Amy Hoak, MarketWatch
CHICAGO (MarketWatch) -- Homes located within walking distance of amenities such as schools, parks and shopping aren't only more convenient for their owners, often they're also worth more than homes in neighborhoods where driving is the rule, according to a new study released Tuesday.
The report looked at 94,000 real-estate transactions in 15 markets. In 13 of those markets, higher levels of "walkability" were directly linked to higher home values.
The report, "Walking the Walk: How Walkability Raises Housing Values in U.S. Cities," was commissioned by CEOs for Cities, a national network of urban leaders from the civic, business, academic and philanthropic sectors.
It's an important point for home-buyers who are trying to identify which homes will hold their value, said Joseph Cortright, the report's author and a senior policy adviser to CEOs for Cities. Cortright is an economist and president of Impresa, a Portland, Ore.-based consulting firm.
Walkable places have some of the best chances of performing well in years ahead, he said.
The analysis used transaction information from ZipRealty. It calculated walkability of the homes using the Walk Score algorithm, which grades addresses based on amenities that are nearby, from restaurants and coffee shops to parks and libraries. Scores range from 0 to 100, with 100 being the most walkable; a score higher than 70 indicates it's possible to get around in the area without using a car.
Controlling for other factors including a home's size, the number of bathrooms and bedrooms, age, neighborhood income levels, distance from the Central Business District and access to jobs, the study found that a one-point increase in Walk Score is linked to an increase in home value between $500 and $3,000, depending on the market, according to the study.
The premium for homes in neighborhoods with above-average Walk Scores ranged from $4,000 to $34,000, according to the report.
Exceptions to the rule
But that premium wasn't found everywhere. In Las Vegas, walkability correlated with lower housing values. Bakersfield, Calif., showed no statistically significant connection between walkability and home prices, according to the study. The report didn't investigate why homes in walkable neighborhoods didn't bring a premium in those two places.
http://www.marketwatch.com/story/hom...ore-2009-08-18
(Site Bonus: Video tour of Bill Gross's new California digs. Whoppee!)
| June 26, 2009 - Kellogg School of Management |
| When Homeowners Walk Away: New Research Reveals More Than 25 Percent of Mortgage Loan Defaults Are Strategic Financial Trust Index Researchers Study Economic and Moral Factors In Strategic Default While the Obama administration's housing policy has been largely influenced by a study of the Boston housing market during the 1990-91 recession in which homes devalued by approximately 10 percent, new research suggests that a novel phenomenon is at hand in the fallout of today's more severe housing crisis - strategic default on mortgage loans. Given that homes in numerous parts of the country have lost more than 30 to 40 percent of their value, many homeowners say they would simply walk away from their loans - without fear of repercussion. A new paper, entitled 'Moral and Social Restraints to Strategic Default on Mortgages,' looks at American homeowners' propensity to default when the value of a mortgage exceeds the value of their house, even if they can afford to pay their mortgage. By using new survey data, the paper estimates that more than a quarter of defaults on mortgage loans are strategic, especially when home values have fallen by more than 15 percent. The new research was led by Paola Sapienza (Kellogg School of Management at Northwestern University) and Luigi Zingales (University of Chicago Booth School of Business) - co-authors of the quarterly Chicago Booth/Kellogg School Financial Trust Index - as well as Luigi Guiso (European University Institute). With data collected from surveys conducted within the last six months as part of the Financial Trust Index, this paper is the first to examine the economic and moral implications of strategic default in the current recession. Negative Equity The study of the Massachusetts housing market during the 1990-91 recession found that very few people who could afford their mortgage chose to walk away from their homes. Consistent with the earlier paper, this new research shows that homeowners refrain from defaulting as long as negative equity does not exceed 10 percent of the value of the home. After that level, however, the researchers found that homeowners start to default at an increasing pace, and walk away massively after decreases of 15 percent and more. In fact, 17 percent of households would default, even if they can afford to pay their mortgage, when the equity shortfall reaches 50 percent of the value of the house. 'Housing policy under the current administration has focused on reducing households' cash flow problems in response to the housing crisis, but no one has addressed the negative equity issue as part of public policy regarding housing,' said Sapienza 'We're in a completely different economic environment today, where for the first time since the Great Depression millions of Americans have mortgage loans that exceed the value of their home.' Moral and Social Factors in Strategic Default According to the researchers, moral and social variables play a significant role in predicting strategic default. People surveyed who said it was immoral to default were 77 percent less likely to declare their intention to do so, while people who know someone who defaulted were 82 percent more likely to say they would default themselves. 'The most important barriers to strategic default seem to be both moral and social,' said Zingales. 'Our research showed there is a 'multiplication effect,' where the social pressure not to default is weakened when homeowners live in areas of high frequency of foreclosures or know others who defaulted strategically. In fact, the predisposition to default increases with the number of foreclosures in the same ZIP code.' 'As defaults become more common, the social stigma attached with defaulting will likely be reduced, especially if there continues to be few repercussions for people who walk away from their loans,' concluded Sapienza. 'This has an adverse effect on homeowners who do pay their mortgages, and the after-effects of more defaults and more price collapse could be economic catastrophe.' http://www.mortgagemediamag.com/news...0010761070.htm |
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