Broadband Can Increase Value of Your Home By Up To 3 Percent

by HSI Staff

Aug 4, 2015 | Share
Technology

It’s not often that someone just decides to give you money. But that’s kind of what Internet Service Providers (ISPs) are doing when they make high-speed Internet service available in your area.

According to researchers at the University of Colorado Boulder and Carnegie Mellon University, faster Internet speeds increase your home’s value. Specifically, they found availability of gigabit adds 3.1% to the value of your home compared to 25 Mbps availability. For the median home price in this country, $175,000, that’s an extra $5,400. Even if you can’t get gigabit service, 100 Mbps availability adds 1.8%, or $3,150 in value.

The researchers reached this conclusion after studying data from more than half a million home sales and comparing it to government data on Internet speed available in the areas where the homes were sold. After crunching the numbers, they learned gigabit service adds as much to a home’s value as installing a new fireplace. But the better part is that you don’t pay the construction cost.

How does this affect me?

The upsides and downsides depend entirely on which side of the transaction you’re on. First, it obviously benefits sellers, and costs buyers, by increasing sale prices where gig speeds are available. But it also presents a potential bargaining chip to buyers in areas that don’t offer high-speed service. Meaning, if buyers can’t get the gig, sellers may not get their asking prices. It may also be inconvenient for buyers who don’t want a gigabit connection, but who will still have to pay for it, in effect, if they buy a home where it’s available.

Incentive for communities to expand access

But the news isn’t just good for homeowners; it’s also good for communities where gigabit speeds are available. Increased home prices mean an increased property tax base, which means more money for civic programs. Of course, this means that homeowners may now have to pay those increased property taxes. If you live in a state that offers a program like California’s Proposition 13, which bases property value on the purchase price and limits annual increases, try to buy a home before the gig comes to town. That way, you’ll have to pay, at most, a small fraction of the added value.

This news gives communities, and even builders of large housing developments, reason to work on behalf of homeowners to increase gigabit availability. We’ll indulge in some speculation that municipalities that have been unable or unwilling to lure broadband providers may be willing to offer tax breaks or other incentives to ISPs and network builders if they know they’ll get the money back in the form of property taxes.

What’s your home worth?

You might not want to put your home on the market until you find out whether gigabit broadband is available where you live. And, if you’re not moving, you can have the best of both worlds – sign up for high-speed Internet service, enjoy the benefits for as long as you own your home, and get all or a good chunk of your money back when you eventually sell it.