A recent study published by Fannie Mae identifies specific locational factors that reduce the risk of mortgage default – specifically commute time, use of rail transit, walkability, the presence of retail uses, the integration of affordable housing, and proximity to parks and open space.
Among the great bits of data found in the study, performed by the University of Arizona, a relationship between likelihood of mortgage default and proximity to parks and open space, as well as walkability. The study found that for every one percent increase in the share of workers who walk to work, a corresponding decrease in the risk of default by 3.1 percent. It also found that if the property was located within one mile of protected green space, the risk of default was reduced by 32.5 percent.
Why is this? One explanation may be found in examining costs of transportation.
In the early 1990’s The National Natural Resources Defense Council hypothesized that buyers of homes in urban areas would have lower transportation costs and thus more income to spend on mortgages than would buyers in suburban, automobile-dependent locations. Further examination of this theory yielded evidence that the assumption mad merit. Since then, the issue has been much more thoroughly examined and refined by a number of researchers, most notably by the Center for Neighborhood Technology and its Housing + Transportation Affordability Index.
People who live in urban, “location-efficient” neighborhoods save money on transportation by driving less and owning fewer vehicles than people the same metro regions taken as a whole. Parks provide opportunities for low-cost, healthy recreation. Trails provide this benefit, too, but they also provide access to low cost and healthy transportation options. Take for example the proposed Helderberg Hudson Rail Trail, in Albany County. By utilizing the trail to commute from the bedroom communities in Bethlehem and New Scotland to downtown Albany. Trail users could save money on transportation (fuel, parking, etc.). It would also benefit the trail user’s wallet in lower health premiums.
The full default study can be downloaded here.