[NOTE: This is the third in a series of four articles on the Playborhood Survey. See Playborhood Survey: Who Responded to read about how we solicited responses and who responded. The survey is now closed. If you’d like, you can respond to the same survey questions, for future analysis, here.]
In the first article on the Playborhood Survey, we showed that parents want their children to play more. In this article, I’ll show that they’re willing to pay big $$$ for that desire.
81.4% of parents said they would move to a new house in a neighborhood adjacent to their current one that has “significantly better play opportunities for your child(ren)” if the move cost them no money. Of the 18.6% who said they would not move, many commented that the cost of moving outside of money costs is just too high.
Then, they answered the question, “How much additional money would you pay” for this house? The results are shown above. The bottom line of these data is that they would be willing to pay a lot.
Let’s put these numbers in perspective. Recall that 75% of all respondents are from the San Francisco Bay Area. In October 2007 the median price for a house in the Bay Area was $625,000, but the median price for houses of respondent parents is likely to be much higher – perhaps $1 million.
Nonetheless, the median amount of money that a parent would be willing to pay in the survey is about $50,000, so, in rough terms, parents are willing to pay 5% extra for a house in a neighborhood with better play opportunities.
This is a very large figure, especially when one steps back to think about the fact that real estate agents usually have zero or next to zero helpful information about play opportunities for prospective residents of a house. To determine whether a house has good play opportunities for a family’s kids, the parents would want to know things like the ages and exact locations of all kids in the neighborhood, how often kids play outside and what they do, whether kids walk to school, how well-equipped the closest parks are, and whether kids from that neighborhood frequent that park.
Instead of providing detailed information on these questions, they know lots about trivia like termite inspections and kitchen counters.
So. obviously, there is an unmet market need in the residential real estate market for information on play opportunities. In fact, one parent commented, “I think it’s hard to know before you buy a house what the neighborhood is like, specifically how many children and what ages they are.”
Sure, it’s hard to know this, but the fact remains that this is vital information for parents.
I’d like to make one other very important point: If it were possible to get information to prospective buyers on the play opportunities of a house’s neighborhood, the price of houses with good play opportunities would go up by, say, 5% or so.
Thus, as this information becomes available, neighborhoods will have a monetary incentive to provide better play opportunities for kids. In other words, apart from the benefits to kids, some parents may want their kids to have more pickup basketball games or games of tag, and then publicize this fact, because it increases their property values.
This may seem like a crass analysis, but in economics, individual incentives do matter, even if they’re not the only reason people do things. So, for instance, people keep their lawns and front foliage neat and trimmed not only because it makes them feel better when they look at their house, but also because doing so increases their property values.