A recently released report by the American Public Transportation Association (APTA) and the National Association of Realtors (NAR) found that in metropolitan areas, properties of most types located within a transit shed hold their value better. than properties located in traffic-free areas. The report, “The New Real Estate Mantra: Location Near Public Transportation,” analyzed five major metropolitan regions: Boston, Chicago, Minneapolis-St.Paul, Phoenix, and San Francisco, to conclude that, overall, properties within transit areas outperformed other properties by 41.6% during the recession.
How properties with access to public transportation held their value
Transit type had a measurable impact on property values, with access to rail (both light and heavy) and bus rapid transit providing the best value. The study noted that properties located with easy access to these transit systems also tended to be more walkable; properties located in walkable neighborhoods carry an additional premium based on previous studies. The frequency and ease of access to transportation also affected property values, with more easily accessible and higher-capacity transit stops insulating value better than transit that was harder to reach or ran less frequently.
Property type also had an impact on value retention in most areas studied. Interestingly, property value retention within the transit shed across all property types outperformed non-transit shed properties in Boston and Chicago. However, in Phoenix, apartment and condominium complexes had substantially higher value when located within the transit shed compared to properties with two to four complexes; Single-family homes were found to work best when located outside of the transit shed. In San Francisco, the opposite was true for multi-family residences combining five or more units, with these properties doing slightly better outside of the transit shed than inside.
Putting APTA data to work
Other data has shown that access to public transportation is an important consideration for many homebuyers. NAR reported that in a recent survey, 76% of shoppers considered transportation costs to be at least somewhat important to their purchase decision. An even earlier study by NAR found occurrences of a transit premium that boosted property values within a certain distance of high-capacity transit lines by as much as 150%. It should be noted, however, that these correlations have not been found to be true in other metropolitan areas; Previous studies conducted in Atlanta, Miami, and Portland found little to no impact on property values based on proximity to rail transit.
As more young adults move to urban settings and establish homes, public transportation may be of greater importance. A study by the Frontier Group and the US PIRG Education Fund found that those between the ages of 16 and 34 drove 23% fewer miles per year in 2009 than in 2001, a trend the authors considered likely to continue. The study also built on previous research findings that 45% of these youth were actively seeking to replace driving with alternative transportation, citing cost and environmental impact among the reasons for this choice.
The data used to assess the impact of traffic on property values for the APTA report was record deed sales prices between 2006 and 2011, controlled for inflation. Proximity to the rail may be a primary concern for many qualified buyers and renters seeking urban amenities, and more so in the years to come. This recent data provides distressed real estate investors with a strong incentive to closely watch foreclosures and access to public transportation for future real estate considerations in these metro areas.
