The Effect on Property Values of Rail and Bus Rapid Transit Lines
At a recent public meeting put on by Los Angeles Metro over a proposed extension of the Green Line south to the Redondo Beach Galleria / Torrance area, a repeated refrain from amongst the attendees was that the extension would lower their property values. What exactly is the relationship between rail line construction and property values?
The answer: it's complicated. Part of the reason why it is complicated is that there are many factors involved in the determination of property values, of which transportation accessibility is just one. Transit lines ( including bus garages and rail yards ) are often built adjacent to industrial zones and expressways; both of these land uses have a negative effect on values. In addition, restrictive land use regulation may prevent increases in property values by limiting development. Finally, areas in which rapid transit lines are built vary a great deal in variables such as economic vitality and household income breakdown.
Historically, most studies of this effect have shown that proximity to transit increases property values (which is great news to green-passengers and others who desire to make transit part of their lives ). Studies have found a positive effect between residential or commercial property values and rapid rail transit in the following cities: Washington, D.C.; the San Francisco Bay area; New York; Boston; Los Angeles; Philadelphia; Portland, Oregon; and San Diego. However, studies in Atlanta and Miami have shown mixed results. In Atlanta, higher income areas near rail stations showed property value declines in one study while lower income areas showed value increases. In Miami, little to no property value increase was found near MetoRail stations.
Whereas housing within walking distance of a station can often command a premium, some studies have shown that living right next to one can decrease property values: a study found in 1990 that homes within 300 meters of a Caltrain station sold at an average discount of $51,000 and homes within 300 meters of a San Jose VTA light rail station sold at an average discount of $31,000 (Landis, J. and D. Loutzenheiser. BART at 20: BART Access and Office BuildingPerformance. Berkeley, Institute of Urban and Regional Development, University of California, 1995). The same study found that living adjacent to a BART station had no nuisance effect, and another study found that was true of Portland as well.
The nuisance of living next to a station can be overcome through careful planning to shield noise and visual pollution from adjoining land. People who have visited the San Francisco area can attest that Caltrain is much louder than either BART or light rail trains.
The effect of transit on property values varied according to several different variables. First, the effect was most pronounced on land within walking distance of a station, generally thought to be within 1/4 to 1/2 mile. The ease of accessing a station via car had little effect. Second, the greater access to employment the rail line offers the better the impact on property values, both for resident access to jobs and commercial access to employees. Third, the greater the importance of transit to the overall region the greater the impact on property values. It is more valuable to live or rent office space nearer larger systems that carry passengers to more locations than it is to live or rent near smaller systems. Fourth, the availability of land near stations for development will have a more positive impact on property values than if land is restricted from development. Thus, it is of extreme importance for cities to take a proactive view towards encouraging transit-oriented development if the full benefits from the construction of the rail line are to be realized. San Diego is perhaps the city that has been most successful in aggressively promoting station sites for transit-oriented development.
The accessibility that the rail line offers affects the resulting change in property values. For example, a peak-period only commuter rail line may make single-family homes, whose residents may have traditional jobs and own a car they can use on evenings and weekends, more valuable but have little effect on multi-family housing that could have a large percentage of its residents be transit dependent. Similarly, traditional business day employers may pay a premium to be located near commuter rail stations whereas retail and other employers who offer non-traditional hours may not.
The issue of accessibility also suggests that as the rail system in a particular region develops and becomes more extensive that land near rail stations that has not previously experienced an increase in value may do so as additional rail lines are opened. Property values may further increase if development pressures become so great that zoning codes are eventually relaxed, and the continuous rise in gasoline prices that will only accelerate in coming years will make it increasingly more valuable to live near transit stations.
In contrast with rail, few studies have at this point examined the effect the bus rapid transit has on property values. An oft-cited advantage of bus rapid transit is that it is flexible and can easily be changed; this advantage is likely a disadvantage in terms of the effect that bus rapid transit will have on property values when compared with rail rapid transit, as one would hypothesize that developers would be less likely to develop around a transportation option that could theoretically be discontinued at any time. However, one of the first studies on this topic, which looked at the East Busway in Pittsburgh, found a significant but small increase in property values for living near an East Busway station.
Some even argue that a transit line could increase property values so significantly that the increase in resulting property taxes could pay for a significant portion of the rail's capital costs. Mayor Rob Ford of Toronto has been a proponent of using this novel approach to tax increment financing to help pay for the Sheppard Subway Extension.
Overall, the presence of rail transit has in general been found to have a significant but slight beneficial effect on both residential and commercial property values, with the exception of residential parcels located directly next to the station, which in some, but not all, cases has experienced a slight decrease in property values due to the nuisance factor. The nuisance factor has been found to be a problem mainly in quiet, suburban areas; the inherently louder nature of higher density areas masks the impacts, if any, of a rail line.