Impact of Greenways on Property Values

Would you prefer the view outside your window to resemble this?

 

Or this?

While everyone is entitled to their own opinion for any given reason, I am willing to assume a large majority would prefer the first two "backyards" over the last two. This is because we place some degree of satisfaction in the presence of green areas, whether it is a lawn or a forest. The subject of my journal article this week is greenways. To define greenways I shall differ you to our friend Wikipedia:

"long, narrow pieces of land, often used for recreation and pedestrian and bicycle traffic."

"The term greenway comes from the "green" in green belt and the "way" in parkway, implying a recreational or pedestrian use rather than a typical street corridor, as well as an emphasis on introducing or maintaining vegetation, in a location where such vegetation is otherwise lacking. Some greenways include community gardens as well as typical park-style landscaping of trees and shrubs. They also tend to have a mostly contiguous pathway, allowing urban commuting via bicycle or foot."

 The research article, "The Impact of Greenways on Property Values: Evidence from Austin, Texas" by Sarah Nicholls and John L. Crompton, discusses how greenways can positively affect property values in urban housing markets. The article begins: "While many of the advantages of public green spaces are highly intuitive
and easy to describe, they are often difficult to quantify."

Many people, whether they be ordinary citizens, businessmen, or government servers, naturally focus on tangible benefits of a place such as it's amenities or condition, but its the intangible factors that could be key. Property values can stimulate the local economy and this paper was an attempt to prove that parks and greenways are a valid means of accomplishing this task. 

By using the Proximate Principle and Hedonic Pricing, these researchers developed 3 study areas and a number of variable by which to judge them including the Sales value of property, View of greenbelt, and distances from various community facilities. 

The proximate principle essentially states that "that the value of a specified amenity is at least partially captured in the price of residential properties proximate to it." That means the things around your house help dictate how much it is worth. This is why people invest in their surroundings, whether it be their backyard garden/deck/pool, or push to have better public facilities such as schools or parks. 

Hedonic pricing is an economic technique developed to measure this principle. It uses six broad characteristics that influence and explain property prices. These are physical or structural features of the individual property, neighborhood conditions, community conditions, locational factors, environmental
factors, and macroeconomic market conditions at the time of sale.

The essence that I took away from this research was that hedonic pricing is a more throughout and accurate representation of property values than the average methods used because it takes into account the quality of life in a given area. There is a reason 2 out of the 3 study areas found property values benefiting from greenways, open space and nature provide intrinsic positive value. Now that there is more concrete proof, this value maybe see its way into the extrinsic realm of the real estate market. Investing in the community's parks and recreation facilities not only provides environmental and recreational benefits, but aesthetic and economic advantages as well.