A 2004 survey by the National Association of Realtors and Smart Growth America revealed that Americans prefer communities with shorter commute times and more places to walk than are found in sprawling communities. Downtown and in-town housing has topped the list of hot markets for the Urban Land Institute’s Emerging Trends in Real Estate for several years, and in 2003 – for the first time in history – sale prices per square foot for attached housing were higher than those for detached housing.
The 2004 survey also measured demand for new types of neighborhoods and homes by asking home buyers what they want to buy, but which doesn’t currently exist. After hearing detailed descriptions of two types of communities, 55% of the people surveyed said they would prefer a home in a smart growth neighborhood. Significantly, of the people who expected to buy a home in the next three years, six in ten people said they would be more likely to shop for something in a smart growth neighborhood.
In addition, market research by real estate developers has consistently found that about 30% of homebuyers seriously consider buying a home in a smart growth neighborhood. Unfortunately, production is not keeping up even with this fairly conservative estimate, which would require about 600,000 homes in smart growth neighborhoods to be constructed each year.
Measuring demand for smart growth homes
Another way to measure demand for smart growth homes is to look at how much consumers are willing to pay for those properties. If homes in smart growth neighborhoods sell for more than functionally-identical homes somewhere else in the same region, economists conclude there is pent-up demand, meaning more people would buy smart growth homes if more of them were available.
A 2009 study on behalf of CEO’s for Cities found that home buyers in thirteen out of fifteen major metropolitan areas were willing to pay more for homes in walkable neighborhoods. Walkability – measured as the distance between a home and various other uses such as shops, restaurants, libraries, schools, etc. – is one of the hallmarks of a smart growth neighborhood. Depending on the metro area studied, buyers were willing to pay from $4,000 to $34,000 more for a home in a neighborhood that was more walkable than that region’s average.