Walkability=Affordability= Profitability=Livability

Where are the Walkable Neighborhoods in Charlottesville/Abemarle?

I wrote the above post last year in response to a potential client’s query, and also because I know this – walkable neighborhoods are more valuable to a large segment of the Charlottesville real estate market.

One thing that consistently needs definition is this – what is walkable to you? For some, it’s five minutes, to others (frequently those from other countries in my experience) under thirty minutes comprises “walking distance.”

In this vein, the question of “what does biking distance” mean to you? (and are there bike lanes?)

Along come this study that –

All of these prior studies suggest that walkability could well produce higher property values. If demand for walkable places is growing and currently exceeds supply, if homes in new neighborhoods designed to promote walking sell at a premium, if access to schools, banks and shopping increase office and apartment rents, and if land use mixing increases property values, then it seems reasonable to hypothesize that walkability improves rents and values. But properties which produce more income at any given point in time will not automatically generate higher investment returns if the higher income was already expected when the property was acquired and purchased at a price that reflects that expectation. Assuming the same risk, for actual (ex post) returns to be higher for walkable properties, income would have to be higher than was expected when the property was acquired or appraised. This is because property values are generally a function of expected earnings, given a certain level of risk.
 
If income for walkable properties was higher than expected, they would have generated higher income returns. And if walkable properties appreciated more than was expected, due to faster than expected income growth or a decline in perceived relative risk, they would have generated higher appreciation returns
So, the effects of walkability on property values and incomes on the one hand and investment returns on the other must be considered as two separate questions. Values will be higher if there are benefits from walkability that are capitalized into property prices. Returns will be higher if incomes or appreciation are larger than were expected when walkable properties were appraised or acquired.
Based on this review, we concluded that walkability may well be producing benefits that are reflected in higher market values and incomes. We also suspected that a shift may be occurring in the marketplace in favor of more walkable places which has not been fully anticipated by investors or appraisers. Therefore, we hypothesized that walkable properties have been valued as much or more and produced investment returns as good as or better than other more auto-oriented real estate.

As often happens, the responses from my post earlier this week garnered some insightful and relevant responses – one of my favorite being:

superninjarobot@JimDuncan They’re definitely more valuable to me! If I can walk somewhere in 20 minutes or less, I usually do.

Practically, I was showing two older houses in Albemarle County this week the day after I read this story. Both were similar in many ways, and the major differentiator was location … coincidentally the asking price differential was $30,000.

Being “close to stuff” matters. Certainly not for everybody, but I’d argue that, for a larger segment of the population than we’ve seen in 50+ years, the following paragraph is applicable and relevant. (Once again, bolding mine)

There are two additional conclusions suggested by the literature. One is that once the mix of nonresidential uses exceeds a certain level in an area, the disamenities effects may begin to dominate. The other is that some non-residential uses, such as retail, parks, and offices, tend to have a more favorable impact on single family values compared to apartments and industrial uses. It seems logical to expect that both the precise amount and the specific mix of uses in an area can affect property values. Moreover, each type of property may differ in how it responds to different amounts and types of other uses. For example, shops and parks and restaurants may benefit residents in homes and apartments and workers in non-residential properties, while industrial uses may always do best when located away from homes and shopping. A search for such “optimum blends” has not been conducted by researchers so far, but it is logical to expect specific uses to benefit most from proximity to a specific amount and mix of other uses.

I’m thinking that homes in Belmont, Hollymead, JPA, Downtown Crozet, Old Trail in Crozet, the (soon-to-be-former) Martha Jefferson neighborhood, Johnson Village are eminently walkable … what would you add?*


* I would love to be able to search by lifestyle …. and I’m wondering how applicable/relevevant/accurage Onboard Informatics’ lifestyle search engine would be in the Charlottesville and Albemarle areas.

Search for homes for sale in Charlottesville by Walkscore at RealCentralVA

Related story:

Would you pay more for walkability? Should you? – Grist

As an aside, I mentioned this study earlier this week on my Posterous blog …. I post some interesting stuff there from time to time before things make it here.

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17 Comments

  1. Daniel August 21, 2009 at 07:03

    I concur with Super Ninja Robot that 20 min. is pretty much my personal threshold as well. Longer than that, and I’d probably use a different mode. That being said, I’d add that design makes a huge difference here too. I’d be willing to walk about twice as far along the downtown mall or a nice neighborhood than I would in other locations. Trees for shade, interesting shops, other people around, attractive buildings all matter. Safety is an issue too, of course, especially at crossings.

    I agree with all of the neighborhoods you’ve mentioned. I’d also add my own of the northern portion of Fifeville, esp. north of Cherry. I think there is a reason why Fifeville had a greater increase in assessed value than any other neighborhood in the region.

    Thanks for bringing up the profitability component to this. Walkable neighborhoods aren’t for everyone, but surely the demand exceeds the current level of supply.

    Reply
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  3. Arthur August 21, 2009 at 12:53

    I don’t think of Johnson Village as walkable. It has nice sidewalks and shade trees, but is not close to stuff.
    Here are the Walkscores for the neighborhoods mentioned.

    Belmont (@belmont and avon) 89
    N. Fifeville (@7th and Dice) 86
    Downtown Crozet 85
    Martha Jefferson (@the hospital) 82
    JPA (@shamrock) 60
    Johnson Village 49
    Hollymead 48
    Old Trail in Crozet 17 (something amiss here)

    In Charlottesville, I think of anything within a half mile of the downtown mall or the corner as very walkable. That includes, most of Belmont, Martha Jefferson, the Northern part of Fifeville, Starr Hill, lots of places. In my experience, the big cost benefits of being able to walk or bike come from being able to commute and so get rid of a car. So that depends on where you work. The other walking trip that I value is going out for dinner or drinks. Drink ‘n walk. I used to think groceries would be important, but who wants to haul 6 bags of groceries home in the summer?

    Reply
  4. Arthur August 21, 2009 at 13:04

    The other thing about walkable neighborhoods in terms of investment is that they tend to focused around cores, so the supply is difficult to expand. Not only are there network effects with greater density increasing amenities and so demand for housing in the area (at least for some people), but increasingly the supply starts to become more costly as buildings have to go up or you have to build on more difficult terrain.

    Reply
  5. C'ville Bubble Blog August 21, 2009 at 13:43

    A couple points. From the article:
    “But properties which produce more income at any given point in time will not automatically generate higher investment returns if the higher income was already expected when the property was acquired and purchased at a price that reflects that expectation.”

    And from commenter Daniel:
    “…but surely the demand exceeds the current level of supply.”

    In Belmont, supply at the “high end” of the market far exceeds demand (not the lower-end, “charming Belmont Cottage” that goes for $200,000). Thinking of the houses in the mid-300’s-599’s that have never sold; some are empty, some are now rentals.

    Belmont has a “buzz” that includes walkability to “Downtown Belmont” as well as to the Downtown Mall. As the article notes, there was an expectation of profitability built into the pricing.

    Somehow, though, the actual demographics of potential buyers weren’t taken into consideration as prices went up and up. When zero down and Option ARMs were available, a consideration of potential buyers wasn’t necessary, anywhere. But those who’d like to buy in the area now often cannot. Or are waiting for things to sort themselves out. (BTW, the BB has an upcoming post that overviews Belmont.)

    Other areas have decent supply as well. Thinking specifically of 10th and Page area. In fact, this week’s Hook “On the Block” features a house on West Street that has been on the market for (at least?) two years. There are at least 10 houses within a stone’s throw for sale; at least three are on the same street. And some have much lower prices than Belmont (not the house featured in The Hook, however.)

    This area isn’t on Arthur’s walkabilty list, perhaps for good reason. But there are comparative “bargains” in that area, and it is highly walkable to UVA and downtown.

    Downtown Crozet seems to be getting more walkable every month. Buyers are finding low prices in that area as well; there seems to be plenty of supply. Ditto Hollymead, though this area has a much more “suburb” feeling to it; there’s not a “town center” that really springs from local businesses.

    Reply
  6. Arthur August 22, 2009 at 06:24

    No good reason for leaving 10th and Page off, I would have included that in my “lots of places” comment. The railroad does make it a little farther from downtown on foot than it appears at a glance, but it is very walkable, especially if you spend time at the University. Walkscore gives it 83 out of 100.

    The market seems pretty well-supplied generally, doesn’t it?

    Reply
  7. Jim Duncan August 22, 2009 at 06:58

    One note on Crozet (and I promise to return to the comments after I finish showing houses all day, fighting UVA traffic) ….

    Walkscore doesn’t appear to have any of the new stuff … Trailside Coffee, the new salon in Old Trail, Anna’s Pizza that’s coming, Mudhouse Coffee, Greenhouse Coffee that’ll be open soon … it still lists Fabulous Foods as being open, doesn’t have the orthodontist that’s now open Downtown … Crozet is becoming as walkable as anywhere else that’s mentioned.

    And, it seems to have a nightlife. We left the Fardowners Pub last night around nine and it was packed, went past Mudhouse and it seemed to be packed as well due to the musician we saw there.

    More later.

    Reply
  8. jf.sellsius.theclozing August 22, 2009 at 08:21

    Yes, I think walkability is an important lifestyle/quality of life factor of value. Even close to drive to is important— living in the boonies, as we call it, is not to most folks’ liking. (But being too close to stuff may not be so great– I lived across the street from a junior high school which sucked for noise and parking during school hours :))
    I’d like to see a search function on commute time, similar to a proximity search.

    Reply
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