Recently, I was asked a question about the effect of street parking on property values in a neighborhood.  I thought about my answer for several hours, actually slept on it, because the answer is more complex than one might think. 

There are two types of neighborhoods I will deal with, the city neighborhood and the subdivision.  The easiest to tackle is the city neighborhood.  In any city, small or large, parking is usually scarce.  Fredericksburg City is no exception.  However, if you are going to live downtown, you accept the notion of street parking.  Heck, you’re happy if there is enough room on the street to park two cars in front of your home.  In a city setting, street parking is a way of life and generally accepted.  Therefore, off street parking is an amenity residents will pay for.  A home in downtown Fredericksburg with off street parking, we won’t even get into the existence of a garage, is in demand.  Because the supply of homes that have off street parking is small and the demand is high, buyers will typically pay more for homes with off street parking than for similar homes without off street parking.  Simply, it’s the law of supply and demand. 

Subdivisions are another story.  Buyers who want to move into a subdivision typically don’t want the stress of city living.  Subdivision dwellers have come to expect maintained lawns and off street parking.  Therefore, the presence of cars parked on streets in subdivisions can effect the marketability of a home.  Marketability translates into list price vs. sales price.  Let’s look at two homes in the same neighborhood listed at the same price (traditional sellers).  The first home has granite counter tops, neutral paint, new carpet, hardwood floors, a two car garage, and is in move-in condition.  The second home has granite counter tops, bold colors throughout, older carpet, and a two car garage.  If both are listed at $350,000, which one is more likely to get a contract first?  The move-in ready home will get the contract first.  The contract will also reflect a contract price closer to the list price than the second home.  Why?  The first home is aesthetically pleasing and appears to require little maintenance.  The home is visually appealing.  This is marketability. 

When buyers look at properties in neighborhoods that do allow street parking they tend to offer less than list price.  The cars on the street give the appearance that the garages aren’t big enough, or that there are too many people living under one roof.  Neighborhoods can begin to look unkept as the streets get more crowded.  Over time, the continued discrepency between list price and offer price lowers the overall sales price in a neighborhood.  In a buyer’s markets, this can have a severe impact on some subdivisions.  Not only is the subdivision battling falling prices due to external factors (economy), but the subdivision is also battling marketability issues with current home buyers.  Buyers are still looking for the American dream.  They still want the picturesque American neighborhood.  The closer a property fits a buyer’s mental image of their new home, the closer the offer price will be to list price.  In this market, sellers should be doing everything in their power to make their property as marketable as possible.