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    Gigabit Internet Connections Make Property Values Rise

    Written by

    Jason Koebler

    Staff Writer

    When families go to buy a new home, they're most often looking for a couple things: Good schools, a safe neighborhood, maybe something that's near public transportation. And, increasingly and undeniably, access to gigabit internet service.

    Cities and towns across the country are beginning to see next generation internet access as a necessity, citing its impact on property values, rents, and overall economic health.

    Take Austin, Texas, for instance. Yes, it's been a city on the rise for more than a decade now, and it's got a legendary music scene, a good university, and a hip vibe. But it's also got Google Fiber, which has helped the city solidify itself as a tech hub.

    In lots of cases, it's a chicken-and-egg situation: Cities with gigabit internet service are doing well economically (and have the real estate numbers to prove it), but there aren't solid stats to prove causation at the moment.

    If we had a choice, we would pick a place to live that has really good service

    "Fiber availability may drive real estate prices upwards. An unobserved variable may jointly determine both real estate prices and fiber presence," Gabor Molnar, a telecommunications researcher at the University of Colorado wrote in a paper last year. "Alternatively, both might be correct. Residential properties in markets with high-speed broadband access would be expected to have greater value. However, good quality broadband infrastructure is also expected to be rolled out first in high-income areas with high-valued real estate."

    Molnar's study was the first large-scale study done in the United States on the hypothesis, and he ultimately concluded that that the "early results are strong enough to justify further research." It’s also worth noting that Google came under fire for allegations of providing fiber first in neighborhoods that were already rich.

    Anecdotally, cities and the people who want to live in them say they need fast internet to be competitive, and they don't necessarily need a study to prove it to them.

    "It's getting to the point where, if my neighboring community has a gig and we're still doing satellite, the property value in that town is going to go up," Deb Socia,  director of Next Century Cities, a coalition of cities trying to provide gigabit internet speeds to their citizens, told me. "You're going to lose people and you're going to lose revenue without it. I'm hearing it from folks in different chambers of commerce, in real estate, in politics. I wouldn't have necessarily thought of it if I hadn't heard it from them."

    fiber optic internet adds roughly $5,250 to the value of a $300,000 home

    Austin has one of the strongest real estate markets in the country, and cities with municipally owned fiber like Wilson, North Carolina and Chattanooga, Tennessee, are doing extremely well as far as small cities go. A recent study by Wichita State University noted that the "Kansas City housing market is clearly on the rebound" and that home values were expected to rise 2.7 percent in 2014, roughly a year after Google Fiber came to the city.

    Though not a ton of research has been done on the subject, there are some other initial studies that back up the idea. A study by RVA LLC Market Research and Consulting that was shared with me by Drew Clark, an attorney with the Kirton McConkie law firm who is working with cities to bring gigabit fiber to residents, found that fiber optic internet adds roughly $5,250 to the value of a $300,000 home. A British study found that people in London are willing to pay 8 percent above market prices for homes and apartments that have high speed internet.

    Clark says that it's not just the handful of cities who have joined Socia's coalition: More than 1,100 cities asked Google to build fiber in their municipalities, and, regardless of whether or not they eventually get picked, they're looking for ways to either build it themselves or partner with someone who will do it for them.

    "They're asking, is there a way for us to be involved or do this on our own?," he told me. "And then they're looking at it and seeing that most municipal fiber projects have been doing quite well in meeting their objectives."

    When you think about it, it's quite an obvious thing for a city and a person to want, and it goes well beyond just being able to binge watch TV shows. Patrick Lucey, a municipal fiber researcher at the Open Technology Institute, told me that cities are seeing this as a necessity, period.

    "It's not just about broadband internet so you can watch Netflix," he told me. "It's about making sure schools and first responders have the bandwidth capabilities they need, it's about letting businesses take advantage of that speed."

    "If we had a choice, we would pick a place to live that has really good service," Socia said. Wouldn't you?