We’re all familiar with the saying that the three most important factors in real estate are “location, location, location.” This rule no longer just refers to the importance of quality schools and neighborhood amenities in close proximity to residential properties.
A new study by the American Public Transportation Association (APTA), in partnership with the National Association of Realtors, adds a new criterion: location near transit.
Real-estate professionals and planners have known for some time that consumers will pay a premium for residential properties that are designed in the “new-urbanist” philosophy, defined in the APTA report as neighborhoods that are “walkable, higher density, and have a mix of uses as well as access to jobs and amenities such as transit.” Studies have shown that consumers will pay 4 percent to 15 percent higher prices for residential properties designed in the new-urbanist vein.
Studies too have demonstrated that real-estate values tend to be higher for properties in proximity to high-capacity transit, known as the “transit premium” in industry parlance. The transit premium results in higher values for transit-proximate locations ranging from a negligible few percentage points to 150 percent, and is more dramatic for office and retail properties than residential.
These prior findings are important, but the significance of the new APTA study lies in demonstrating what was previously suspected but unproven. Now we know that during the U.S.’s recent recession residential property values were more resilient and held their values better when located in proximity to high-capacity transit. Homes located near transit benefit consumers by providing better access to jobs, lower transportation costs, and walkability – benefits previously understood by planners, but now backed up with hard data.
The APTA study looked at five regions – Boston, Chicago, Minneapolis-St. Paul, Phoenix, and San Francisco – between 2006 and 2011. The cities selected for the study range from those with mature transit systems, such as Boston, to cities with newer transit systems such as Phoenix, whose metro became operational in 2008. All cities showed price resiliency for properties located near high-frequency public transportation. But it’s perhaps no surprise that the city with the best-connected and most mature transit system, Boston, showed the most dramatic resistance to depressed prices during our country’s recent recession. Overall, the transit-connected areas outperformed the region as a whole by 42 percent.
The study finally notes the policy implications: “The relative stability of property values in areas with transit access … helps to provide consumers and planners with better information, and encourages greater investment in transit and more sustainable development patterns.”
Consumers continue to vote with their feet, and urban form and transportation options have played a key role in the ability of residential properties to maintain their value during the recession.
More information – including video, audio, and slides – are available at the Environmental and Energy Study Institute’s website.