Monday , September 25, 2017 - 5:15 AM
Ogden’s outdoor assets are a major selling point for many homebuyers, but it turns out, proximity to trails could also elevate real estate prices.
Weber State University economics professors Matt Gnagey and Therese Grijalva conducted a study where they teased out the value of homes near trails from homes that simply have nice mountain views or sit close to open space. They found buyers are willing to spend a little more to be close to trails in Ogden, paying a premium between 0.4 percent to 1.9 percent for each minute less in driving time to a trailhead.
On Ogden’s East Bench, that premium is between 1.4 percent and 2.8 percent. That means for a home worth the Ogden area’s median value of $160,000, buyers pay $2,240 to $4,480 more to live one minute closer to a trail.
“I think it’s a pretty substantial finding,” Gnagey said. “It’s not just, ‘I want to live near the mountains to see them,’ it’s ‘I actually want to use the mountains.’ Which makes sense for Ogden residents.”
The study looked at home purchases in Ogden, North Ogden and South Ogden from June 2014 through May 2016, analyzing 2,711 single-family residential properties. They used GIS software to map the properties, then calculated each home’s drive time to the nearest trailhead.
The study specifically looked at homes near the Ogden Nature Center trailhead, 22nd Street trailhead and 29th Street trailhead in Ogden City, as well as the Ogden Divide trailhead in North Ogden and Beus Canyon trailhead in South Ogden.
From there, they used a hedonic model to tease out the added value of those trailheads compared to other factors, like scenic views. Gnagey explained the hedonic pricing model using an analogy — imagine sitting outside a grocery store, asking shoppers what they have in their carts and how much they paid.
One shopper might have paid $100 for their cart of groceries, which includes bananas and hamburger. Another shopper might have paid less, maybe $50, but has some of the same items in his cart.
“Eventually, if you did this enough times, you could kind of figure out the price of bananas or the price of hamburger,” Gnagey said.
With real estate data, economists can look at homes of similar sizes and a similar number of bedrooms and figure out how much buyers are willing to pay for different amenities.
“As long as we have good sales prices, actual sales prices, then we can tease it out,” Grijalva said.
Several Ogden-area real estate agents, however, dispute whether proximity to trails makes a difference in how much their clients are wiling to pay.
“I know people enjoy being on the (East) Bench. I don’t know if it equates definitively to a trailhead,” said Sue Wilkerson with RE/MAX Crossroads.
While East Bench neighborhoods are close to Ogden’s trails, Wilkerson said the desire to live there has more to do with the condition of the homes and the quality of schools. It could also be because homes above Harrison Boulevard have secondary water, she said, while downtown Ogden does not.
“It’s as odd as imaging trail proximity has anything to do with house values,” she said.
Joe Butcher, an agent with CENTURY 21 Gage Froerer & Associates, Inc., said he was also surprised by the study’s findings.
“I personally think there’s a little coincidence there,” he said.
Buyers have largely been motivated by Ogden’s home inventory — in the last 18 months or so, there simply haven’t been enough homes for sale to be picky about whether they’re close to trails, Butcher said.
“At this point, if you’ve got one home for sale in a neighborhood that’s in the buyer’s price range, that’s all they have to choose from,” he said.
Both Butcher and Wilkerson don’t dispute the fact that Ogden’s outdoor assets attract those looking for a new home. But that’s one of the city’s many selling points — every neighborhood has a trail nearby.
“I have buyers and clients that like the outdoors,” Butcher said. “But ... I think same demographic is willing to buy a home in downtown Ogden, simply because it’s still close to those amenities.”
Gnagney and Grijalva both agree that most Ogdenites — at least those with cars — can be on a trail in a matter of minutes.
“One thing that’s nice about the Ogden community is, if you look at maximum driving time from any house to a trailhead, it’s 13 minutes,” Grijalva said. “Everyone has access.”
It’s still useful for policymakers to understand the value of trails, they said.
“If you just ask someone how much they value a hike, they might say $50 or $100 — but would they really pay $50 to go on that hike? They really did pay for that house, though, and really did pay a higher value for that house,” Gnagey said. “When you break down the price of a house and realize 1 to 2 percent is coming from that value, it’s a nice quantification.”
From there, city or county officials can figure out the return on investment for things like adding trails or improving trailhead by adding bathrooms or parking. If buyers are willing to pay for to be close to those amenities, property values go up, which means more revenue going back into public systems.
Interestingly, while the study found buyers pay a premium for homes near trails in Ogden and South Ogden, drive time to the Ogden Divide trailhead played no role in home values for North Ogden.
The professors noted they hadn’t conducted any surveys with buyers, so they can only speculate why.
It could be because there aren’t really any homes near the Ogden Divide trailhead.
“There’s also a different type of user that likes the Divide trailhead,” Gnagey said. “That’s where horses and dirt bikes can go.”
While the study focused on the Ogden area, the results could be applied to other towns with similar demographics in areas like Cache or Davis counties.
Similar research could also help inform local debates about trails, like whether to add one through Ogden Canyon.
“We would like to see economics used more for questions like that,” Grijalva said. “We’d like to see them used in policy decisions.”
The study was accepted by the Annals of Regional Science and will be published in a forthcoming edition.
Sign up for e-mail news updates.