New urbanism adds to housing value, study says

Better internal connectivity, smaller blocks, and pedestrian accessibility to shops and other commercial uses are reasons why buyers are willing to pay more to live in a new urban community, according to a recent study on New Urbanism and Housing Values. The report, by the National Center for Smart Growth Research and Education based at the University of Maryland, looks at the Orenco Station development in Hillsboro, Oregon, and houses throughout the western Portland metro region. The report differs from a previous study by George Washington University — which also found a new urban premium — in that the new analysis identifies how specific characteristics of New Urbanism and conventional development affect values.

According to authors Yan Song and Gerrit Knaap: “Residents are willing to pay premiums for houses in neighborhoods with more connective street networks; more streets; shorter dead-end streets; more and smaller blocks; better pedestrian accessibility to commercial uses; more evenly distributed mixed land uses in the neighborhood; and proximity to operating light rail stations. We also find residents are willing to pay less for houses in neighborhoods that are dense, contain more commercial, multifamily, and public uses (relative to single-family uses), and contain major transportation arterials. When combining these features in composite sketches of new urbanist and traditional neighborhoods,we find that homes in a new urbanist neighborhood command an aggregate price premium. What is more, we find that this premium more than compensates for the severe price discount for the small size of new urbanists lots.”

All of the characteristics added up to a more than $24,000 price premium for Orenco Station. In an interesting twist, an additional reason found for Orenco’s price premium was lower external connectivity, i.e., less frequent connections to arterial roads. That’s a characteristic that may add to housing value but not one that new urbanists encourage. The typical conventional subdivision west of Portland has two external connection points, 475 feet apart. Orenco has 10 connection points, but they average more than 1,000 feet apart, Yan and Knaap find. Yan explains, however, that this finding can’t be generalized to other new urban communities. Orenco planners were restricted in making connection points to arterials, she says. “Planners want to have greater external connectivity, but transportation engineers are more concerned with” limiting the access points to the arterial roads, she says. The report can be found at www.smart growth.umd.edu/research.