Estimating the value of a new transit option

The research presented here argues that identifying the impacts of rail transit on property values is not possible without estimates of both price gradients to transit stations as well as overall property value trends in transit neighborhoods. The latter may highlight a number of secondary impacts of rail transit on nuisance elements such as crime and parking as well as targeted public and private investment along rail-transit corridors. In order to estimate neighborhood property values, one must establish relevant control neighborhoods. In the case of Charlotte, North Carolina, the public planning and funding process provides information on proposed light rail-transit (LRT) corridors that were ultimately not selected as the first alignment in Charlotte's light rail transit system in 2000. Estimation incorporates a difference-in-difference estimator across a range of hedonic models. Preferred estimates highlight that LRT provides a neighborhood impact of 4.0% for single-family properties and 11.3% for condominiums sold within 1 mile of LRT stations. No neighborhood impacts are realized for commercial properties and estimated price gradients provide insignificant impacts across a number of models. Results suggest that LRT investment may be used more as an economic development tool for specific neighborhoods rather than a transportation amenity in cities like Charlotte, which contain sparser development patterns.

Research highlights
► We model light-rail transit (LRT) as influencing both neighborhood property values as well as price gradients to transit stations.
► We incorporate counterfactual neighborhoods based on the LRT planning process in Charlotte, NC.
► Hedonic coefficients provide positive impacts on transit neighborhood single-family and condominium property values.
► Results are insignificant for commercial properties.