Americans took 9.9 billion trips on public transportation in 2018, a boost in ridership outpacing the growth of the country’s population—and making living near public transit a hot ticket.
The American Public Transportation Association (APTA) of Washington, D.C., released the ridership statistics earlier this year, emphasizing public transportation’s economic and community benefits. Among the advantages of leaving the driving to someone else? Property values near high-frequency public transportation traditionally perform 42% better than in other areas, according to APTA.
While that percentage might vary in individual markets, proximity to transit is a top concern for buyers interested in smoother commutes and a walkable community feel.
“Being close to public transportation is, no doubt at all, going to raise the property value,” said Chicago real estate agent Matt Laricy, a 17-year veteran agent whose average price point is $409,000.
He estimated that being near public transportation increases property values at least 15% in the downtown Chicago market, as well as its suburbs. At least one-quarter of his potential buyers search for properties that are within a 10 to 15-minute walk of Chicago Transit Authority (CTA) service, especially the city’s elevated trains, he said.
“If you live in a suburb … [and] have a house that’s closer to the train station, it will be worth more money as well. Way more money,” he said.
However, not all types of public transit enhance property values, even within the same market. Pricing depends on several factors, including accessibility, noise, and other neighborhood perks. Read on to find out more.
More than one way to get somewhere
According to APTA, public transportation is a $71 billion industry that encompasses many different modes, including:
- Light rail
- Commuter trains
- Trolleys and streetcars
- Monorails and tramways
- Cable cars
- Vanpool services
- Ferries and water taxis
- Paratransit services for people with disabilities and senior citizens
Research from the Center for Real Estate and Urban Analysis at George Washington University in Washington, D.C. shows that investment in transit, in general, has spurred real estate growth in Detroit, Miami, Pittsburgh, and Los Angeles, as well as revitalized suburban town centers. What’s more, rent in accessible and walkable urban places (or WalkUPs) has increased by 19% since 2010, this research shows.
Millennials (62%) and members of the Silent or Greatest Generation (or those born before 1944 —55%) in particular prefer walkable communities, shorter commutes, and access to public transit, according to the National Association of Realtors’ Community and Transportation Preference Survey.
The survey polled 3,000 adults living in the 50 largest metropolitan areas nationwide and found that 62% said that having public transit nearby was important to them. In addition, 60% said that they would be willing to pay “a little or a lot more” to live within walking distance of parks, shops, and restaurants. Young women (39%) especially prioritized being near public transit.
Public transit at its best: convenient and speedy
Not all cities have the same quality of public transportation. The personal finance website, WalletHub, this year compared transit in 100 cities across 17 key metrics. The cities that scored the best as far as accessibility, convenience, safety, and reliability are:
- Seattle, Washington
- Boston, Massachusetts
- San Francisco, California
- Washington, D.C.
- Madison, Wisconsin
- Jersey City, New Jersey
- New York, New York
- Reno, Nevada
- Honolulu, Hawaii
- Portland, Oregon
Transportation costs are second only to the costs of housing, adds the Center for Neighborhood Technology (CNT) of Chicago, which has developed a searchable Housing and Transportation Affordability Index where people can see how their neighborhood ranks with both the cost of housing and transportation as a percentage of income.
Most transportation decisions in community planning, for decades, have been based upon the assumption that every household will own at least two cars for residents to drive wherever they need to go, the CNT adds. Focusing on transit-oriented development improves people’s access to jobs, schools, and other needs while also benefiting businesses, developers, and the environment.
The speed and convenience of public transit is already a huge draw for buyers who weigh it against other factors such as inclement weather and driving time. In Chicago, which ranked 25 in WalletHub’s evaluation, the bus is popular, but buyers by far prefer proximity to the train, Laricy said.
“You could live in a suburb like Lakeview, which is where the Cubs play, and you can make it down to the Loop in 20 minutes on the train,” he said. “It’s a big attraction to be able to walk to the train and get right to work.”
Chicago is known for its cold winters—the average high temperature in January is 35 degrees Fahrenheit, with an average low of 18 degrees Fahrenheit—so families that have no car or only one car say proximity to transit is a must-have.
“Winters are rough in Chicago,” Laricy said. If a property isn’t near the train but residents can catch a nearby bus to the train or their destination, “that’ll be a big plus.”
Condo prices earlier this year bear this out, according to research from real estate research company Integra Realty Resources of Denver, Colorado. The combined median listing price of condos for sale in March in the Wicker Park and Logan Square areas—which are along the CTA’s Blue Line—was $535,000, substantially higher than the combined median list price of $490,000 in the lakefront areas Lincoln Park and Lakeview.
However, the connectivity to the Blue Line was just one advantage, according to the nonprofit news organization Block Club Chicago. Buyers also received more square footage at those prices.
Even so, for some buyers, square footage matters less, Laricy said. “People will sacrifice a lot to walk to the train … like a half-bath or something. You’d be surprised.”
Transit itself doesn’t equal dollars
Closeness to public transportation is like any other amenity in real estate: it doesn’t exist in a vacuum.
Research in the journal Sustainability this year examined how urban rail transit influenced residential property values in China, looking not just at the location of public transportation but neighborhood and property characteristics. The age of a building negatively impacted property values while the biggest enhancement came from having a supermarket nearby. Transit provided value when it helped people access something else they found desirable, such as shopping, banking, or medical care.
For transit truly to benefit property values, it needs to be competitive with—and more attractive than—other transportation modes, said research from McMaster University of Ontario about transit’s impact on land values over the past 40 years.
If a neighborhood already has convenient access to a highway system, or cycling and pedestrian options, a new transit line isn’t as much of a perk, McMaster University researchers told CityLab, a publication focusing on urban design, environment, transportation, and living. Transit “can definitely push up the value of land” in far-flung or traffic-clogged neighborhoods where residents weigh factors such as traffic congestion, fuel costs, and parking, these researchers said.
Transportation also has its drawbacks, notably noise. Potential buyers skittish about road noise aren’t likely to be eager to live near a rail station or tracks where the noise level (about 80 to 96 decibels) is about as loud as a jet engine.
Pricing your home near public transit
To price your home right, consider how popular public transportation is in your area, as well as your proximity to it. If you’re in an urban area or one that involves a commute and you’re within walking distance or a quick drive, “it’s the first thing you put in your listing,” Laricy said.
Some clients who think their place is worth as much as another’s sometimes don’t consider how the latter is near any public transportation while they are not. “That’s a much better location and going to go for, like, 15% more because of that,” he said.
If you’re so close to public transit that you can see and hear it outside your home, talk to your real estate agent about anything that could help mitigate the noise—or about pricing your home accordingly. Laricy estimated reducing the price about 15% for clients’ whose properties abut the train tracks.
That said, residents who live on “train streets” notice the noise less than those who are directly across the street, or several feet away from the tracks. For those properties, Laricy points out when they’re “not on the track side.”
“That way, you’ll get more looks,” he said. “It’s a healthy balance. You want to be close enough that you can walk to it, but not too close that you can hear it.”
If you find living near public transportation too much of a headache, talk to your real estate agent about other plusses your property has that could outweigh that potential negative. But if living near public transit is something you’ve enjoyed, chances are, potential buyers will too—and reward you with a substantial offer.
Header Image Source: (Luca Bravo/ Unsplash)