You’ve heard the real estate investment mantra: “location, location, location,” now it’s “transit, transit, transit,” read more about transit’s contribution to property values…
Location, location, location? For rents and home prices, it’s now transit, transit, transit
By Dylan Thomas and Paxtyn Merten –
Puget Sound Business Journal
Oct 21, 2019, 1:58pm EDT
Property values and rents rose faster in areas with easy access to transit over a recent four-year period, according to a report that examined the link between transit and real estate in Seattle and six other U.S. metro areas.
Released last week by the nonprofit American Public Transit Association and the National Association of Realtors, the report relies on data collected between 2012 and 2016. It focuses on areas within a half-mile of fixed-guideway transit stations, or those served by light rail, commuter rail or bus rapid transit — not simply a bus route. In Seattle, that means 17 light rail stations, 12 commuter rail stations and 26 city streetcar stops.
The report found that median residential home sale prices increased 43 percent for Seattle homes within a half-mile radius of those stations between 2012 and 2016, surpassing the 30 percent increase for homes further from transit. Median rents also increased 18 percent near transit, the largest increase of all the cities included in the study and the largest discrepancy compared to rents further from transit, which increased just 4 percent.
Price increases were steepest along Link light rail (55 percent) and the First Hill streetcar (56 percent). At some individual stations outside downtown Seattle, the increases were even more profound: Home values increased 123 percent within a half-mile of the Rainier Beach light rail station and 114 percent near Kent Station on the Seattle-Tacoma commuter rail, the study shows.
As of 2016, 167,690 people in 84,485 households resided within a half-mile of Seattle’s fixed-guideway transit stations, making up 5 percent of the Seattle metro area’s population and 6 percent of its households, according to the study. Those residents were more than twice as likely to take public transit to work than the general population at 22 percent.
The report’s authors argue that transit-rich areas are more desirable because of accessibility to jobs and amenities and the lower cost of living.
“These neighborhoods are often more walkable, with more retail density and other amenities, and include a higher percentage of households with less reliance on vehicles. As more people look to reside in these transit-rich areas, the property market is healthy and competitive,” they write.
The other cities analyzed in the report were Boston; Eugene, Oregon; Hartford, Connecticut; Los Angeles; Phoenix; and Minneapolis-St. Paul. The report’s findings were first shared at APTA’s annual TRANSform conference, which opened Oct. 12 in New York City.
Comment:
The link between transit access and rise in real estate values in Seattle and other U.S. cities is well documented by a multitude of similar research reports. What is important to note is that this value premium is the product of local government actions that give property added value.
This surplus value, reflected in land values, can either be retained by individual owners as a capitalized asset or captured by the public sector to be redistributed as public benefit. Public jurisdictions have the legitimate right to recapture incremental land value increases through special assessments. Hence, some portion of the benefits of a public transit project derived by nearby property owners should be recaptured.
At CGORWA we are promoting a market-sensitive approach to value capture – to set the levy rate sufficient to capture only the incremental increase in land values beyond the growth levels that had been generally occurring without the transit improvements – the premium attributed to transit station location. The term for this is Transit Benefit District (TBD).
TBD funds collected from property owners within the benefit district over a prescribed project period are used to support the creation of transit-oriented development (TOD), or compact, mixed use neighborhoods located near transit stations that by design encourage residents, workers and shoppers to walk and to ride transit.
