The average value of housing performed nearly 42 percent better when located near high-frequency public transit during the worst slump in the real estate market in recent years, according to a new study commissioned by APTA in partnership with the National Association of Realtors (NAR).
The study, The New Real-Estate Mantra: Location Near Public Transportation, projected the nationwide average variance among properties by analyzing housing market data for 2006-2011 from a representative sample of cities: Phoenix, Boston, San Francisco, Minneapolis-St. Paul, and Chicago. It focused on residential property located near a “transit shed”—areas that are one-half mile or less from a transit stop.
It showed that heavy rail, bus rapid transit, and light rail, all of which are characterized by more frequent service and transfer options, had a greater impact on real estate values when compared to homes in the region that were not near high-frequency public transit.
The study, prepared by the Center for Neighborhood Technology, also shows that homes located near high-frequency public transportation provide greater access to more jobs.
“Consumers are choosing neighborhoods with high-frequency public transportation because it provides access to up to five times as many jobs per square mile as compared to other areas in a given region,” said APTA President & CEO Michael Melaniphy. “Other attractive amenities in these neighborhoods include lower transportation costs, walkable areas, and robust transportation choices.”
He added: “And when I say lower transportation costs, that means lower transportation costs for all—even for individuals who don’t use public transit because these areas are also known for shorter car trips due to close-by amenities. These findings show that communities benefit when they respond to market demand. Clearly consumers are voting with their feet, showing they want communities with more choices.”
The study also suggested that public transportation can serve as an economic catalyst for neighborhoods.
“Transportation plays an important role in real estate and housing decisions, and the data suggest that residential real estate near public transit will remain attractive to buyers going forward,” said NAR Chief Economist Lawrence Yun. “A sound transportation system not only benefits individual property owners, but also creates the foundation for a community’s long-term economic well-being.”
The five metropolitan regions highlighted in the study represent a sample of the types of high-frequency public transportation systems throughout the U.S., as well as the types of communities served by public transportation. A few specific findings for each metropolitan area follow.
Boston: Residential property in the rapid transit area outperformed other properties in the region by 129 percent. The Massachusetts Bay Transportation Authority (MBTA), a mature public transit system, provides access to almost three times as many jobs per square mile. The number of jobs in the Boston transit area is 170,000, versus 57,000 in the region per square mile.
“We’ve long appreciated the link between transit investment and economic development, including housing production and value retention,” said MBTA General Manager Beverly A. Scott, Ph.D. “We’re so fortunate that Boston understood this concept decades ago, when neighborhoods developed as transit expanded (‘Streetcar Suburbs’). Today, the transit system continues to improve the quality of life and strengthen our communities with a new generation of urban dwellers who choose to live near public transportation and abandon automobiles.”
Chicago: Home values performed 30 percent better in areas served by public transit than the region as a whole. Also, residents close to the city’s public transportation system spent $300 less on transportation per month than the regional average.
“Transit continues to be a cornerstone of economic growth for Chicago, connecting residents with jobs every day,” said Chicago Transit Authority (CTA) President Forrest Claypool. “Mayor Rahm Emanuel and I are committed to making the significant investments in the CTA system that allow us to continue to provide affordable, reliable transportation to all, which creates strong neighborhoods and communities.”
Minneapolis-St. Paul: Homes in the transit shed performed 48 percent better than the region, with housing and other development springing up around stations.
“What we’ve seen in the Twin Cities is that with our first line—Hiawatha light rail (2004)—transit-oriented development lagged construction and operation. That said, nearly 11,000 residential units have been added near station areas and an additional 4,500 are proposed,” said Metro Transit General Manager Brian Lamb.
“With the Northstar commuter rail line (November 2009) and Green Line light rail (mid-2014), development has been more contemporaneous,” Lamb continued. “Looking ahead to planned LRT and BRT lines, development is beginning to even move ahead of planned transit projects. It is encouraging to see the emergence of a common vision between the public sector at all levels, developers, and the community at large.”
Phoenix: Home values performed 37 percent better than the region. Areas served by Valley Metro, a relatively young public transit system, provide 88,000 jobs per square mile versus 32,000 jobs for the region. Residents who live near high-frequency public transit in Phoenix save $175 per month in transportation costs.
“Transit use is being incorporated into the lifestyles of our local residents as they travel to their daily destinations. Increasing ridership proves there is a greater acceptance of riding bus and light rail for travel to work, school, shopping, and entertainment,” said Valley Metro CEO Steve Banta. “Businesses are realizing the significance of creating a total transit network that brings customers to their front doors. Whether relocating a business or considering a new home, our diverse, multi-generational residents are considering transit accessibility a top priority in their decisions on where to establish their place geographically.”
San Francisco: In the San Francisco public transit area, home values performed 37 percent better than the region. The area hosts a number of public transit systems, with the San Francisco Bay Area Rapid Transit District (BART) serving 44 stations on five heavy rail lines and an average weekday ridership of nearly 384,000.
“Studies show that home buyers are willing to pay a premium to live in a neighborhood where they can walk to reliable public transit,” said BART General Manager Grace Crunican. “This is especially true in San Francisco, where those who live closer to transit have access to three times as many jobs. It’s no surprise to us that Standard & Poors/Case-Shiller’s January report showed in the counties served by BART—San Francisco, Alameda, Contra Costa, and San Mateo—home prices surged 17.5 percent in 2012 compared to 2011 levels.”
To read the report, click here.