You want to find a neighborhood that will hold its value and may even appreciate once the housing recession ends?
Take a walk.
Communities that have amenities and services within walking distance and don't require a car may win out over time and may even reward you with equity gains.
Although we're seeing some moderation in the home-value free fall of the past three years, the value of walkability may be difficult to measure as U.S. home prices continue to show signs of distress in most markets.
Yet it's worth trying to envision the other side of this pernicious slump. If you're choosing a place to relocate, retire to or reinvent yourself in, the most walkable cities offer plenty of options.
Pedestrian-friendly cities can make huge personal economic sense. If you don't need a car, you can save thousands a year on financing, leasing, insurance, maintenance, gas and parking fees -- especially if you own more than one vehicle.
Living where there's ubiquitous and reliable public transportation and services within a mile or less also means fewer worries about traffic jams, accidents, wasted money and time. And walking is good for you, so you could improve your health and lose weight.
Almost without exception, the most walkable neighborhoods are within older, established cities and suburbs and not sprawling, car-dominated communities, or what I call "spurbs," according to research I did for my new book The Cul-de-Sac Syndrome (also available from Barnes and Noble).
According to Walkscore, a service that rates 40 cities and more than 2,500 neighborhoods, San Francisco, New York, Boston, Chicago, Philadelphia and Seattle rank as the most walkable cities. (See more cities.)
Within those cities, areas such as New York's Soho; San Francisco's Chinatown; Boston's Back Bay; Chicago's Loop; Philly's City Center and Seattle's Pioneer Square rank highly as the most pedestrian-friendly neighborhoods in the country.
Having walked these neighborhoods and most of the other top-rated cities, I concur that these areas meet Walkscore's criteria of being mixed-income, mixed-use, amenity-packed and densely populated.
Christopher Leinberger, a fellow at the Brookings Institution and a director of Walkscore's board, noted that long-term trends favor these neighborhoods because "Millenials," or the children of baby boomers, prefer them over suburbs. Their retiring parents may eventually favor them as well.
"Millenials are saying 'why do I have to invest in a fleet of cars?'" Leinberger says.
In the face of a national housing downturn, does it make sense to invest in the most-walkable neighborhoods (or stay put if you're already there)?
According to Leinberger's research, he surmises that each additional point on the Walkscore scale -- 100 is the highest walkability rating -- may translate into from $1,000 to $3,000 more per square foot of housing value.
A superficial analysis bears witness to his observation. You'll pay a lot more for housing in New York's Tribeca, which is rated 100, than in Charlotte, North Carolina, which is rated 38.
I know that's not a fair comparison. New York, San Francisco, Boston and other older cities will always be more expensive due to scarcity of land, jobs and general desirability.
Still, I can argue that prices overall have held up better in the walkable cities relative to the S&P Case-Shiller 20-city index.
New York home prices, for example, gained 4% over the past five years through March 31, versus a decline of about 10% in the 20-city index for that period. Seattle was almost 28% above the multi-city average. Boston was about a half a percentage point better.
Declines Still Ahead
In contrast, a relatively pedestrian-hostile city like Atlanta lagged the national average by about 2 percentage points. And walkability isn't everything. The highest-priced, foreclosure-wracked but very walkable San Francisco trailed the national benchmark by 17 points.
I'm not saying that walkability is the sole reason for picking a place to live, nor does it guarantee affordability or appreciation.
For a better deal in housing, you'll definitely have to look outside of the most walkable cities.
Places like Hinesville, Georgia; Farmington, New Mexico; or Lebanon, Pennsylvania; might be better places to look for better prices and lower risk of losing equity, according to Homesmart Reports, a home investment risk-rating service.
In the meantime, home prices will not be a random walk. The cities where there was rampant overbuilding, speculation, over leveraging or foreclosures will still continue to decline. Even places not hit most directly by the bust will be hurting. Unemployment will continue to ravage even the best-planned urban settings.
But keep in mind that taking a stroll and real estate investing still have two things in common: You have to be patient to reap the long-term benefits.
John F. Wasik, author of The Cul-de-Sac Syndrome: Turning Around the Unsustainable American Dream, is a personal finance columnist for Bloomberg News and the author of several books. His most recent book, The Merchant of Power, was praised by Studs Terkel and well reviewed by the New York Times. Wasik has won more than fifteen awards for consumer journalism, including the 2008 Lisagor and several from the National Press Club. He has appeared on such national media as NBC, NPR, and PBS. He lives in Chicago. For more information please visit www.johnwasik.com.
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