Special Briefing on Walkability
AEIdeas
February 25, 2020
The American Enterprise Institute’s Housing Center released a special update to the AEI Housing Market Indicators on February 24th, 2020. The briefing covers the following:
- Relative walkability matters; It provides a home price appreciation (HPA) lift over 90 percent of the time in the top 50 metros, even for heavily car-dependent metros. Walkability for higher priced homes adds intrinsic value without relying much on mortgage leverage, thus potentially allowing these homes to be more resilient through market booms and busts.
- For 31 of the top 50 metros, homes that sold in 2018 have less walkability than those sold in 2012. This is due to the scarcity of walkable properties.
- Among the six metros with high average walk scores in 2018, five (Los Angeles, Chicago, San Francisco, San Jose, and New York) trended to less walkability, with Philadelphia, PA being the one exception.
- To improve walkability, more new homes need to be built in more walkable areas. However, the walkability of new construction sales uniformly lags existing sales, with the lag tending to increase as walkability declines. While New York has the highest average walkability among new construction sales, there is very little new construction.
- By focusing on the top two quintiles of walkable tracts in each metro, we see that each metro has some potential to increase overall walkability. While walkability is highly correlated with greater land cost, this may be compensated for by expanding from 1-unit single family to light touch density (1-4 unit single family).
The AEI Housing Market Indicators provide accurate and timely metrics for the housing market. These include Mortgage Risk/Leverage (with a particular focus on agency first-time buyer volume and risk), house prices and appreciation trends, housing sales (new and existing sales whether institutionally financed, cash, and other-financed), and inventory levels. Since the housing market is influenced by many different factors, all need to be considered together to better understand market trends.
Please find materials from our monthly call below. If you would like to receive invitations to our monthly update calls, please email [email protected]. For data on mortgage risk, please use our Mortgage Risk Index Interactive.
Audio Recording
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