NCPA - National Center for Policy Analysis

How Fast Internet Affects Home Prices

July 7, 2015

As the Internet becomes central to the way Americans work and live, the availability of speedy Internet service is starting to affect Americans' biggest purchase: their homes, according to Ryan Knutson writing for the Wall Street Journal.

Fiber-optic connections, the fastest type of high speed Internet available, can add $5,437 to the price of a $175,000 home — about as much as a fireplace, or half the value of a bathroom. Telecom companies by law are required to make telephone service available to every residence in their service areas, but the same isn't true for all high speed Internet providers.

  • Phone lines can deliver DSL service, typically slower than 10 megabits a second. Satellite service is usually even slower.
  • The impact is most acute in rural areas, where Internet speeds tend to drop dramatically. As of 2013, 92 percent of urban areas had high speed Internet, compared with 47 percent of rural areas.

In Western Massachusetts local officials are trying to solve the connectivity problem by building their own high speed networks. To accomplish that they're borrowing a tactic developed a century ago when the region was struggling to gain access to electricity.

  • More than 40 towns have formed a cooperative of Municipal Lighting Plants, a type of public utility first invented to build electricity infrastructure, and are raising funds to build out fiber connections.
  • So far this year, 19 of those towns have passed bond measures to fund construction. More than 40 percent of residents in 14 of those towns have already paid a deposit for service.

What people want in a home can vary a lot, and values can depend heavily on broader market forces. But broadband is starting to figure into that same calculus.

Source: Ryan Knutson, "How Fast Internet Affects Home Prices," Wall Street Journal, June 30, 2015.


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