Home prices in neighborhoods with access to public transit performed significantly better during the housing slump than home prices in other communities, according to a study by the Center for Neighborhood Technology, a nonprofit think-tank that promotes urban sustainability.
The study, “The New Real Estate Mantra: Location Near Public Transportation,” concluded that home values in areas with access to “fixed-guideway” public transit service performed 42 percent better than homes further from public transit in the same regions from 2006 to 2011. Fixed-guideway transit includes commuter rail, heavy rail, light rail, bus rapid transit, and ferry service.
The study — commissioned by the National Association of Realtors and the American Public Transportation Association — concluded that these findings “support investment in transit and encourage development in location efficient areas. The presence of fixed-guideway transit not only benefits individual property owners, it also supports a more resilient tax base.”
NAR and APTA will host a Congressional briefing today to review the findings of the study, and discuss public transportation’s positive impact on communities.
“Location, location, location near public transportation may be the new real-estate mantra,” the trade associations said in a statement announcing the release of the study.
According to the Census Bureau, 23 percent of workers with commutes of 60 minutes or more use public transit, compared to 5.3 percent of all workers. About 10.8 million Americans have commutes of more than an hour, the Census Bureau says, and nearly 600,000 full-time workers have “megacommutes” of at least 90 minutes.
“Stable property values in areas of public transit have a very clear policy implication,” said Darnell Grisby, director of policy development and research at APTA. “Congress, state and local government should look for ways to promote growth … by investing in more public transportation.”
Describing homes near public transit “as desirable as beachfront property,” APTA CEO Michael Melaniphy said in a statement that access to as many as five times the number of jobs per square mile as other communities is one allure of neighborhoods near public transit. But transportation costs, neighborhood walkability and diverse transportation options also drive demand for those homes, he added.
Grisby said demographic trends are fueling demand for properties in neighborhoods with access to public transit. More baby boomers and seniors are choosing to shed larger properties for smaller ones that are closer to low-cost transportation, he said.
And millenials are also showing an increased affinity for such neighborhoods, added Matt Lerner, co-founder of Walk Score, a website that helps people gauge a neighborhood’s walkability.
“Younger people would rather be on public transit with their smart phone than they would be driving somewhere,” Lerner said. “Older people, say, ‘When I’m too old to drive, I want to be able to stay in my office.’ ”
The Great Recession may have accelerated this trend, Grisby said, providing an enhanced value buffer for communities with public transit, as people flocked to those communities for access to more jobs.
Boston posted a particularly impressive result in the study: areas in the region near public transit outperformed other communities by a jaw-dropping 128.7 percent.
The study looked at the housing markets of Boston, San Francisco, Chicago, Phoenix, and St. Paul, Minn., which they said provided a balanced representation of different public-transit options in the U.S., like subway, rail and bus.
The analysis also showed that people who live in areas with access to public transit enjoy substantially lower transportation costs. In San Francisco, for example, people in areas near public transit save an average of $346 a month compared to people who live elsewhere in the region.
The study highlights that access to transportation is a “strong selling point” for homebuyers, Grisby said. He added that the study also provides evidence that walkability is a big draw for people who are moving, and that it may contribute to a community’s resilience during a downturn.
A 2009 study corroborated the price premium of walkability. It found a one-point increase in Walk Score was associated with an increase in value ranging from $500 to $3,000, depending on the market.
Walk Scores, generated by the company Walk Score, are determined based on a neighborhood’s walking distance to different destinations.
In addition to gauging a neighborhood’s walkability, the site allows a user to see listings based on how close they are to a user’s office or public transit.
It’s just one of a few other relatively new services that cater to people’s interest in transportation and walkability. INRIX Drive Time, launched last week by Windermere Real Estate and INRIX, is another. The company claims to provide ultra-precise travel times to drivers.
Grisby himself said he recently used Walk Score to calculate commuting times between his office and the different properties he was looking at. He said the results of those calculations played a strong role in his purchasing decision.
“If my agent had done that, I would have been really impressed,” he said.