Market Acceptance of Smart Growth
For decades, developers have been creating smart growth communities—places with a mix of land uses and housing types, built compactly to make walking and biking easier—throughout the county in urban, suburban, and rural locations. Some communities structure their approval and entitlement process to encourage construction of this type of neighborhood. Other communities are less familiar with these neighborhoods and may present more hurdles in the approval process because the design and layout of these projects differ from conventional suburban master-planned developments. Learning more about whether a new product has market longevity and whether it will be a good fit for local residents, employers, the tax base, and the greater community can help these local governments determine whether they want to encourage this new type of development. In addition to learning about the environmental and health benefits associated with compact, walkable neighborhoods, local governments are interested in finding out whether these projects can maintain their value over the long term, provide a good investment to home owners, and offer the local market a housing development that enhances the community.
EPA published Market Acceptance of Smart Growth to contribute to a better understanding of the impact of and potential for smart growth development approaches by considering long-term trends in price appreciation. It compares resale prices for single-family houses and townhouses in smart growth developments with units in conventional developments that are equivalent in terms of size, age, amenities, and location. The report finds that not only do smart growth developments enjoy market acceptance as evidenced by stability in prices over time, but that in study comparisons where sufficient performance conclusions could be determined, homes in smart growth developments often enjoyed greater resale appreciation than did their conventional suburban counterparts.
This report uses resale data from 18 smart growth developments and 18 conventional suburban developments across the United States to contrast their appreciation between 1998 and 2004. Twenty-one comparisons were completed in 17 case studies (in some cases, there were multiple developments within a single community). In 10 of those comparisons, the smart growth communities showed higher resale appreciation. In six of the comparisons, the conventional suburban communities showed higher resale appreciation. In two cases, the compared communities showed equivalent performance, and in three cases, inadequate data meant that no conclusion could be reached.
These results show that there is consumer acceptance of smart growth projects based on long-term housing values. Market Acceptance of Smart Growth (PDF) (83 pp, 849K, About PDF) provides communities that are considering developing a smart growth project with valuable economic information about how home buyers value these projects over time.