ABSTRACT
Identifying and measuring the land value uplift (LVU) impacts of rapid transit are important for a number of reasons. However, despite the general notion that rapid transit does confer positive LVU benefits, our comprehensive and critical review of more than 130 analyses across 60 studies completed in North America over the past 40 years finds significant heterogeneity in research outcomes, leaving many significant questions unanswered. Beyond high-level differences in study inputs, we argue that a fundamental source of variability is a lack of empirical specificity from the use of proximity as the dominant way in which LVU benefits are captured. This use of a proxy leads to the potential for omitted variables and unobserved relationships, and exposes previous work to the potential for misvalued results. To overcome this issue, we outline recommendations for future research, namely a recognition of relative accessibility and the possibility of LVU impacts from transit-oriented development. Incorporating measures related to these factors into LVU models can reveal their implicit prices, resulting in research that is more theoretically inclusive, empirically comprehensive, comparable, and able to provide important information to inform policy analysis and prescription.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 This sample consists of studies by Al-Mosaind, Dueker, and Strathman (Citation1993), Alterkawi (Citation1991), Armstrong (Citation1994), Armstrong and Rodriguez (Citation2006), Atkinson-Palombo (Citation2010), Bajic (Citation1983), Benjamin and Sirmans (Citation1996), Bernick and Carroll (Citation1991), Bernick, Cervero, and Menotti (Citation1994), Bollinger, Ihlanfeldt, and Bowes (Citation1998), Bowes and Ihlandfeldt (Citation2001), Boyce, Allen, Mudge, Slater, and Isserman (Citation1972), Cervero (Citation1996; Citation2004), Cervero and Duncan (Citation2002a; Citation2002b; Citation2002c), Cervero and Landis (Citation1993), Chatman, Tulach, and Kim (Citation2012), Chen, Rufolo, and Dueker (Citation1998), Clower and Weinstein (Citation2002), Damm, Lerman, Lerner-Lam, and Young (Citation1980), Davis (Citation1970), Dewees (Citation1976), Diao (Citation2015), Diao and Ferreira (Citation2010), Dornbush (Citation1975), Dubé, Des Rosiers, Thériault, and Dib (Citation2011), Dubé, Thériault, and Des Rosiers (Citation2013), Duncan (Citation2008; Citation2011a; Citation2011b), Dyett et al. (Citation1979), Falcke (Citation1978), Farooq, Miller, and Haider (Citation2010), Fejarang (Citation1993), Ferguson, Goldberg, and Mark (Citation1988), Garrett (Citation2004), Gatzlaff and Smith (Citation1993), Goetz, Ko, Hagar, Ton, and Matson (Citation2010), Golub, Guhathakurta, and Sollapuram (Citation2012), Grass (Citation1992), Haider and Miller (Citation2000), Hess and Almeida (Citation2007), Hewitt and Hewitt (Citation2012), Kahn (Citation2007), Kim and Lahr (Citation2013), Kittrell (Citation2012), Knaap, Ding, and Hopkins (Citation2001), Ko and Cao (Citation2013), Landis and Loutzenheiser (Citation1995), Landis, Guhathakurta, Huang, and Zhang (Citation1995), Lee (Citation1973), Lewis-Workman and Brod (Citation1997), McDonald and Osuji (Citation1995), McMillen and McDonald (Citation2004), Nelson (Citation1992; Citation1999), Nelson and McClesky (Citation1990), Pan (Citation2013), Perk and Catalá (Citation2009), Perk, Bovino, Catalá, Reader, and Ulloa (Citation2013), Petheram, Nelson, Miller, and Ewing (Citation2013), Ryan (Citation2005), Rybeck (Citation1981), Seo, Golub, and Kuby (Citation2014), Skaburskis (Citation1982), Smith (Citation1978), VNI Rainbow (Citation1992), Voith (Citation1991; Citation1993), Weinberger (Citation2001), Weinstein and Clower (Citation1999), and Yan, Delmelle, and Duncan (Citation2012).
2 The earliest study known to the authors is that of Spengler’s (Citation1930) comparison of assessed values in New York City.
3 Readers interested in a more detailed explanation of the model in general and applied to rapid transit specifically are directed to Brueckner (Citation1987) and Debrezion et al. (Citation2007).
4 Readers interested in a more detailed overview of the method and applications are directed to Malpezzi’s (Citation2002) review.
5 Beyond the hedonic method, there are other methods with associated functional forms for estimating the value placed on environmental amenities, such as McFadden’s (Citation1978) proposal to use of discrete choice methods grounded in random utility theory to model residential location. An integration of the bid-rent foundations of the AMM model and McFadden’s approach can be found in the work of Martinez (Citation1992). However, to the best of our knowledge, no rapid transit LVU studies published to date have used these methods.
7 Assuming that accessibility is effectively modelled, inter-modal comparisons may reveal interesting qualitative differences between modes.
Al-Mosaind, M. A., Dueker, K. J., & Strathman, J. G. (1993). Light-rail transit stations and property values: A hedonic price approach. Transportation Research Record, 1400, 90–94. Alterkawi, M. (1991). Land economic impact of fixed guideway rapid transit systems on urban development in selected metropolitan areas: The issue of price-distance gradients. College Station: Texas A&M University. Armstrong, R. J. (1994). Impacts of commuter rail service as reflected in single-family residential property values. Transportation Research Record, 1466, 88–98. Armstrong, R. J., & Rodriguez, D. A. (2006). An evaluation of the accessibility benefits of commuter rail in eastern Massachusetts using spatial hedonic price functions. Transportation, 33, 21–43. doi: 10.1007/s11116-005-0949-x Atkinson-Palombo, C. (2010). Comparing the capitalisation benefits of light-rail transit and overlay zoning for single-family houses and condos by neighbourhood type in metropolitan phoenix, Arizona. Urban Studies, 47(11), 2409–2426. doi: 10.1177/0042098009357963 Bajic, V. (1983). The effects of a new subway line on housing prices in metropolitan Toronto. Urban Studies, 20, 147–158. doi: 10.1080/00420988320080291 Benjamin, J. D., & Sirmans, G. S. (1996). Mass transportation, apartment rent and property values. Journal of Real Estate Research, 12(1), 1–8. doi: 10.1007/978-94-009-1802-3_1 Bernick, M., & Carroll, M. (1991). A study of housing built near rail transit stations: Northern California. Berkeley, CA: Institute of Urban and Regional Development. Bernick, M., Cervero, R., & Menotti, V. (1994). Comparison of rents at transit-based housing projects in northern California. Berkeley, CA: Institute of Urban and Regional Development. Bollinger, C. R., Ihlanfeldt, K. R., & Bowes, D. R. (1998). Spatial variation in office rents within the Atlanta region. Urban Studies, 35(7), 1097–1118. doi: 10.1080/0042098984501 Bowes, D. R., & Ihlanfeldt, K. R. (2001). Identifying the impacts of rail transit stations on residential property values. Journal of Urban Economics, 50(1), 1–25. doi: 10.1006/juec.2001.2214 Boyce, D., Allen, B., Mudge, R., Slater, P. B., & Isserman, A. M. (1972). Impact of rapid transit on suburban residential property values and land development: Analysis of the high-speed line. Philadelphia: Wharton School, University of Pennsylvania. Cervero, R. (1996). Transit-based housing in the San Francisco bay area: Market profiles and rent premiums. Transportation Quarterly, 50(3), 33–49. Cervero, R. (2004). Effects of light and commuter rail transit on land prices: Experiences in San Diego county. Journal of the Transportation Research Forum, 43(1), 121–138. Cervero, R., & Duncan, M. (2002a). Benefits of proximity to rail on housing markets: Experiences in Santa Clara county. Journal of Public Transportation, 5(1), 1–18. Cervero, R., & Duncan, M. (2002b). Transit’s value added effects: Light and commuter rail services and commercial land values. Transportation Research Record, 1805, 8–15. Cervero, R., & Duncan, M. (2002c). Land value impacts of rail transit services in Los Angeles county. Washington, DC: Urban Land Institute and the National Association of Realtors. Cervero, R., & Landis, J. (1993). Assessing the impacts of urban rail transit on local real estate markets using quasi-experimental comparisons. Transportation Research Part A, 27(1), 13–22. doi: 10.1016/0191-2615(93)90009-Y Chatman, D. G., Tulach, N. K., & Kim, K. (2012). Evaluating the economic impacts of light rail by measuring home appreciation: A first look at New Jersey’s river line. Urban Studies, 49(3), 467–487. doi: 10.1177/0042098011404933 Chen, H., Rufolo, A., & Dueker, K. J. (1998). Measuring the impact of light rail systems on single-family home values: A hedonic approach with geographic information system application. Transportation Research Record, 1617, 38–43. Clower, T. L., & Weinstein, B. L. (2002). The impact of Dallas (Texas) area rapid transit light rail stations on taxable property valuations. The Australasian Journal of Regional Studies, 8(3), 389–400. Damm, D., Lerman, S. R., Lerner-Lam, E., & Young, J. (1980). Response of urban real estate values in anticipation of the Washington metro. Journal of Transport Economics and Policy, 14, 315–336. Davis, F. W. (1970). Proximity to a rapid transit station as a factor in residential property values. Appraisal Journal, 38, 554–572. Dewees, D. N. (1976). The effect of a subway on residential property values in Toronto. Journal of Urban Economics, 3, 357–369. doi: 10.1016/0094-1190(76)90035-8 Diao, M. (2015). Selectivity, spatial autocorrelation and the valuation of transit accessibility. Urban Studies, 52(1), 159–177. doi: 10.1177/0042098014523686 Diao, M., & Ferreira, J. (2010). Residential property values and the built environment: Empirical study in the Boston, Massachusetts, metropolitan area. Transportation Research Record, 2174, 138–147. Dornbush, M. (1975). BART-induced changes in property values and rents. Washington, DC: US Department of Transportation, US Department of Housing and Urban Development. Dubé, J., Des Rosiers, F., Thériault, M., & Dib, P. (2011). Economic impact of a supply change in mass transit in urban areas: A Canadian example. Transportation Research Part A, 45, 46–62. Dubé, J., Thériault, M., & Des Rosiers, F. (2013). Commuter rail accessibility and house values: The case of the Montréal South Shore, Canada, 1992–2009. Transportation Research Part A, 54, 49–66. Duncan, M. (2008). Comparing rail transit capitalization benefits for single-family and condominium units in San Diego, California. Transportation Research Record, 2067, 120–130. Duncan, M. (2011a). The impact of transit-oriented development on housing prices in San Diego, CA. Urban Studies, 48(1), 101–127. doi: 10.1177/0042098009359958 Duncan, M. (2011b). The synergistic influence of light rail stations and zoning on home prices. Environment and Planning A, 43(9), 2125–2142. doi: 10.1068/a43406 Dyett, M., Dornbush, D., Fajans, M., Falcke, C., Gussman, V., & Merchant, J. (1979). Land use and urban development impacts of BART (FINAL REPORT). Washington, DC: US Department of Transportation, US Department of Housing and Urban Development. Falcke, C. (1978). Study of BART's effects on property prices and rents. Washington, DC: Urban Mass Transit Administration, US Department of Transportation. Farooq, B., Miller, E. J., & Haider, M. (2010). Hedonic analysis of office space rent. Transportation Research Record, 2174, 118–127. Fejarang, R. A. (1993). Impact on property values: A study of the Los Angeles Metro Rail. European transport conference 21st summer annual meeting (pp. 27–41). London: PTRC Education and Research Services Limited. Ferguson, B. G., Goldberg, M. A., & Mark, J. (1988). The pre-service impacts of the Vancouver advanced light rail system on single-family property values. In J. M. Clapp & S. D. Messner (Eds.), Real estate market analysis: Methods and applications (pp. 78–107). New York, NY: Praeger. Garrett, T. (2004). Light rail transit in America: policy issues and prospects for economic development. St. Louis, MO: Federal Reserve Bank of St. Louis. Gatzlaff, D. H., & Smith, M. T. (1993). The impact of the Miami Metrorail on the value of residences near station locations. Land Economics, 69(1), 54–66. doi: 10.2307/3146278 Goetz, E. G., Ko, K., Hagar, A., Ton, H., & Matson, J. (2010). The Hiawatha line: Impacts on land use and residential housing value. Minneapolis: University of Minnesota, Humphrey Institute of Public Affairs, Center for Transportation Studies. Golub, A., Guhathakurta, S., & Sollapuram, B. (2012). Spatial and temporal capitalization effects of light rail in phoenix: From conception, planning, and construction to operation. Journal of Planning Education and Research, 32(4), 415–429. doi: 10.1177/0739456X12455523 Grass, R. G. (1992). The estimation of residential property values around transit station sites in Washington, DC. Journal of Economics and Finance, 16(2), 139–146. doi: 10.1007/BF02920114 Golub, A., Guhathakurta, S., & Sollapuram, B. (2012). Spatial and temporal capitalization effects of light rail in phoenix: From conception, planning, and construction to operation. Journal of Planning Education and Research, 32(4), 415–429. doi: 10.1177/0739456X12455523 Hess, D. B., & Almeida, T. M. (2007). Impact of proximity to light rail rapid transit on station-area property values in buffalo, New York. Urban Studies, 44(5/6), 1041–1068. doi: 10.1080/00420980701256005 Hewitt, C. M., & Hewitt, W. E. (2012). The effect of proximity to urban rail on housing prices in Ottawa. Journal of Public Transportation, 15(4), 43–65. doi: 10.5038/2375-0901.15.4.3 Kahn, M. E. (2007). Gentrification trends in new transit-oriented communities: Evidence from 14 cities that expanded and built rail transit systems. Real Estate Economics, 35(2), 155–182. doi: 10.1111/j.1540-6229.2007.00186.x Kim, K., & Lahr, M. L. (2013). The impact of Hudson-Bergen light rail on residential property appreciation. Papers in Regional Science, 93, 1–19. Kittrell, K. (2012). Impacts of vacant land values: Comparison of metro light rail station areas in phoenix, Arizona. Transportation Research Record, 2276, 138–145. Knaap, G. J., Ding, C., & Hopkins, L. D. (2001). Do plans matter? The effects of light rail plans on land values in station areas. Journal of Planning Education and Research, 21(1), 32–39. doi: 10.1177/0739456X0102100103 Ko, K., & Cao, X. (2013). The impact of the Hiawatha light rail on commercial and industrial property values in Minneapolis. Journal of Public Transportation, 16(1), 47–66. doi: 10.5038/2375-0901.16.1.3 Landis, J., & Loutzenheiser, D. (1995). BART at 20: BART access and office building performance. Berkeley: Institute of Urban and Regional Development, University of California. Landis, J., Guhathakurta, S., Huang, W., & Zhang, M. (1995). Rail transit investments, real estate values, and land use change: A comparative analysis of five California rail transit systems. Berkeley: University of California Transportation Center. Lee, D. B. (1973). Case studies and impacts of BART on prices of single family residences. Berkeley: Institute of Urban and Regional Development, University of California. Lewis-Workman, S., & Brod, D. (1997). Measuring the neighborhood benefits of rail transit accessibility. Transportation Research Record, 1576, 147–153. McDonald, J. F., & Osuji, C. I. (1995). The effect of anticipated transportation improvement on residential land values. Regional Science and Urban Economics, 25(3), 261–278. doi: 10.1016/0166-0462(94)02085-U McMillen, D. P., & McDonald, J. (2004). Reaction of house prices to a new rapid transit line: Chicago’s midway line, 1983–1999. Real Estate Economics, 32(3), 463–486. doi: 10.1111/j.1080-8620.2004.00099.x Nelson, A. C. (1992). Effects of elevated heavy-rail transit stations on house prices with respect to neighborhood income. Transportation Research Record, 1359, 127–132. Nelson, A. C. (1999). Transit stations and commercial property values: A case study with policy and land-use implications. Journal of Public Transportation, 2(3), 77–93. Nelson, A. C., & McClesky, S. J. (1990). Improving the effects of elevated transit stations on neighborhoods. Transportation Research Record, 1266, 173–180. Pan, Q. (2013). The impacts of an urban light rail system on residential property values: A case study of the Houston MetroRail transit line. Transportation Planning and Technology, 36(2), 145–169. doi: 10.1080/03081060.2012.739311 Perk, V., & Catalá, M. (2009). Land use impacts of bus rapid transit: Effects of station proximity on property values of single family homes along Pittsburgh’s Martin Luther King, Jr., East Busway. Washington, DC: US Department of Transportation. Perk, V., Bovino, S., Catalá, M., Reader, S., & Ulloa, S. (2013). Silver line bus rapid transit in Boston, Massachusetts: Impacts on sale prices of condominiums along Washington street. Transportation Research Record, 2350, 72–79. Petheram, S. J., Nelson, A. C., Miller, M., & Ewing, R. (2013). Use of the real estate market to establish light rail station catchment areas. Transportation Research Record, 2357, 95–99. Ryan, S. (2005). The value of access to highways and light rail transit: Evidence for industrial and office firms. Urban Studies, 42(4), 751–764. doi: 10.1080/00420980500060350 Rybeck, W. (1981). Transit-induced land values: Development and revenue implications. Economic Development Commentary (National Council for Urban Economic Development), 5(1), 23–27. Seo, K., Golub, A., & Kuby, M. (2014). Combined impacts of highways and light rail transit on residential property values: A spatial hedonic price model for phoenix, Arizona. Journal of Transport Geography, 41, 53–62. doi: 10.1016/j.jtrangeo.2014.08.003 Skaburskis, A. (1982). Externalities and property prices: A test of the Schall hypothesis. Journal of Regional Science, 22(2), 213–223. doi: 10.1111/j.1467-9787.1982.tb00746.x Smith, B. A. (1978). Measuring the value of urban amenities. Journal of Urban Economics, 5(3), 370–387. doi: 10.1016/0094-1190(78)90017-7 VNI Rainbow. (1992). Analysis of the impact of light rail transit on real estate values. San Diego, CA: VNI Rainbow Appraisal Service, Metropolitan Transit Development Board. Voith, R. (1991). Transportation, sorting and house values. Real Estate Economics, 19(2), 117–137. doi: 10.1111/1540-6229.00545 Voith, R. (1993). Changing capitalization of CBD-oriented transportation systems: Evidence from Philadelphia, 1970–1988. Journal of Urban Economics, 33(3), 361–376. doi: 10.1006/juec.1993.1021 Weinberger, R. R. (2001). Light rail proximity: Benefit or detriment in the case of Santa Clara county, California? Transportation Research Record, 1747, 104–113. Weinstein, B. L., & Clower, T. L. (1999). The initial impacts of the DART LRT system. Denton: Center for Economic Development Research, The University of North Texas. Yan, S., Delmelle, E., & Duncan, M. (2012). The impact of a new light rail system on single-family property values in Charlotte, North Carolina. Journal of Transport and Land Use, 5(2), 60–67. Spengler, E. H. (1930). Land values in New York in relation to transit facilities. New York, NY: Columbia University Press. Brueckner, J. K. (1987). The structure of urban equilibria: A unified treatment of the Muth-Mills model. In E. S. Mills (Ed.), Handbook of regional and urban economics (pp. 821–845). Amsterdam: Elsevier. Debrezion, G., Pels, E., & Rietveld, P. (2007). The impact of railway stations on residential and commercial property values: A meta-analysis. The Journal of Real Estate Finance and Economics, 35(2), 161–180. doi: 10.1007/s11146-007-9032-z Malpezzi, S. (2002). Hedonic pricing models: A selective and applied review. In T. O’Sullivan & K. Gibb (Eds.), Housing economics and public policy. Oxford: Blackwell Science. McFadden, D. L. (1978). Modelling the choice of residential location. In A. Karlqvist, L. Lundqvist, F. Snickars, & J. W. Weibull (Eds.), Spatial interaction theory and planning models (pp. 75–96). Amsterdam: North-Holland. Martinez, F. J. (1992). The bid-choice land-use model: An integrated economic framework. Environment and Planning A, 24, 871–885. doi: 10.1068/a240871 Bowen, W. M., Mikelbank, B. A., & Prestegaard, D. M. (2001). Theoretical and empirical considerations regarding space in hedonic housing price model applications. Growth and Change, 32(4), 466–490. doi: 10.1111/0017-4815.00171