(Excerpts from http://www.rpa.org/pdf/RPA-The-ARC-Effect.pdf)
A statistical analysis of the effect of three recent improvements to NJ TRANSIT’s rail system on home values provided some surprising results.
Hedonic price modeling of 45,000 home sales within two miles of train stations shows that three improvements to the NJ TRANSIT rail system – Midtown Direct Service on the Morris & Essex Line, the Montclair Connection for the Montclair-Boonton Line and Secaucus Junction for the Pascack Valley and Main/Bergen/Port Jervis Lines – increased the value of nearby homes by an average of nearly $23,000 per home (in 2009 dollars).
Homes within walking distance of train stations gained the most value – up to $34,000. Value appreciations were less significant farther from stations. Cumulatively, these three projects boosted home values by $11 billion. This represents $250 million a year in new property tax revenue for municipalities.
While increased property values and increased tax revenues are great for the economy, the ‘transit effect’ does not stop there. More efficient commuter travel means that employers have access to a larger workforce, and that workers have access to more jobs. Improving New Jersey and New York State residents’ access to Manhattan from west of the Hudson River is particularly important since average wages in the region’s economic hub are 60% higher. Reduced commuting times also mean more hours in the day that can be spent either for work or leisure
As transit increases the value of land and built properties near stations, and as new residents and new businesses move into the transit-served communities, so will municipal and state tax bases. This new property, income and sales tax revenue could help to improve municipal and state services, and reduce pressure to increase tax rates.
That the greatest gains in value happened closest to stations is an indication that the most effective way to harness the economic benefits of transit is to build densely around stations. New districts of housing, office and retail that are tightly knit around stations would revitalize downtowns, boost local economies, increase tax revenues, and generally have a larger positive economic impact with smaller traffic and infrastructure costs.