Hobbies Cars & Motorcycles Rail Transit and Property Values What Certain Studies Can Tell Us Share PINTEREST Email Print Michele Falzone/AWL ImagesGetty Images Cars & Motorcycles Public Transportation Cars Motorcycles Used Cars SUVs Trucks ATVs & Off Road By Christopher MacKechnie Christopher MacKechnie is an urban planning professional who has worked on several large transit systems in Los Angeles and Long Beach. our editorial process Christopher MacKechnie Updated May 16, 2018 Back in 2010, when the City of Los Angeles first proposed the extension of its Green Line light rail system south to the Redondo Beach Galleria/Torrance area, property owners in the area voiced concern over the economic impact such an expansion could have on their homes and commercial establishments. That is partly the reason why, as of 2018, the Metro (formerly known as MTA) department is still studying the issue. As such, there are a few things that nearly a decade of debate can tell us about how a rail line extension into your neighborhood could impact your property values. What Determines Property Value? The issue is complicated. That's because many factors are involved in the determination of property values, of which public transportation accessibility is just one. Transit lines (including bus garages and rail yards) are often built adjacent to industrial zones and expressways—and both of these land uses have a negative effect on values. In addition, restrictive land-use regulation can prevent increases in property values by limiting development. Finally, areas, where rapid transit lines are built, vary a great deal in their economic vitality and household income breakdown. Historic Comparisons Historically, most studies of the transit effect have shown that proximity to transit increases property values (which is great news for green-passengers and others who are committed to making transit a part of their lives). Studies have found a positive effect between residential or commercial property values and rapid rail transit in several cities, including Washington, D.C., the San Francisco Bay area, New York, Boston, Los Angeles, Philadelphia, Portland 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 its MetroRail 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 1990 study in the San Francisco Bay Area found that homes within 300 meters of a Caltrain station sold at an average discount of $51,000, while homes within 300 meters of a San Jose VTA light rail station sold at an average discount of $31,000. The same study found that living adjacent to a BART subway station had no nuisance effect, and another study found a similar situation was true in Portland as well. Accessibility The effect of transit on property values varies according to several variables. The effect tends to be most pronounced on land within walking distance of a station, generally thought to be within one quarter to a half mile. The ease of accessing a station via car has little effect.The greater access to employment the rail line offers, the better the impact on property values, both for residents getting to jobs and for businesses attracting employees.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.The availability of developable land near stations has a more positive impact on property values than if the land is restricted from development. Thus, it's important for cities to take a proactive view and encourage transit-oriented development if they want to realize the full benefits from the construction of a rail line. 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 can make single-family homes, whose residents may have traditional jobs and own a car for use on evenings and weekends, more valuable. That same peak-period line might have little effect on multifamily housing with a large percentage of residents who are transit dependent. Similarly, employers with traditional business workdays may pay a premium to be located near commuter rail stations, whereas retail and other employers who offer nontraditional hours may not. The issue of accessibility also suggests that as the rail system in a particular region develops and becomes more extensive, the land near rail stations that have 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. The continuous rise in gasoline prices also makes it increasingly more valuable to live near transit stations. Bus Lines and Property Values In contrast with rail, few studies have examined the effect of bus rapid transit 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 has on property values when compared with rail lines. Developers might be less likely to build 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 residences near an East Busway station. 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 transit line, especially rail. The nuisance of living next to a station can be overcome through careful planning to shield noise and visual pollution from adjoining properties. People who have visited the San Francisco area can attest that Caltrain is much louder than either BART or light rail trains. A Novel Approach Some transit advocates contend 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. Some politicians in Toronto have been proponents of using this novel approach to tax increment financing to help pay for the city's 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. In some, but not all, of these cases, property owners have seen a slight decrease in property values due to the nuisance factor.