Question:

We have to write a report on

“The impact of light rail on property values.”

The assessment is determining that you understand the principals of report writing. The main purpose of this assignment is to write a report.

The report includes( introduction followed by executive summary then Literature review and at the end conclusion).

The report will include 8-12 articles with literature review and their reference. The referencing should be in Harvard Style. You can download the articles into computer and then reference them in Harvard style using “Mendeley ” application. There is referencing option in word document which will give option for Mendeley.

I am seeking that you understand the structure of a report. As stated and listed in lesson the required word count is between 3500 to 4000.

Answer:

Introduction

As discussed by Ma, Ye and Titheridge (2014), the investments in the light-rail transit have been identified with several benefits in the transportation system and accessibility of the population to “employment, retail, and recreation activities”. The investments are seen to bring a variety of impacts to the area encompassing the rail alignment. The most evident impact of the light rail transit is considered with transit projects which allows the users to access retail stores, educational resources and place of work with more ease. Furthermore, the amount of space devoted for the residential property is usually higher than that are devoted to other users. The study has taken into consideration the impact of light rail on property values in Australia and several other countries (Seo, Golub and Kuby 2014).

The discourse of the study will include the land value gains attributable to the light rail system on the “Gold Coast, Australia”. In addition to this, several other empirical evidences will be incorporated with impact of light rail investment on the housing prices in northwest Sydney. Some of the other evidences would be included from impact of light-rail project throughout North America on property values. The main literature review is based on studying the demographic and “socioeconomic profile, accessibility provided by the new transit investment, sales price of single-family homes, apartment rents and median home value”. The learnings of the study have been further included the increase in the property values due to proximity of the light-rail with highway facilities and other industrial users.

The study on the impact of light-rail in Northwest Sydney is depicted with accessibility and amenity of residential properties along with overall affordability. The main assessments have identified the depictions on comparing price trends before and after the construction of rail line in early 2009. The evidence is from the studies for light rail system on the Gold Coast, Australia, are estimated with net of automatic property tax increases and value gains in the land. This paper further seeks to understand the economic benefits from the Stage One GCLR investment by considering the degree to which time travel reductions have improved accessibility to the nearby property near the light-rail corridor. In addition to this, some of the studies on “North America is based on combating the property values such as sales prices of single-family homes, apartment rents, and median home value” (Pan et al. 2014).

Literature Review

Impact of Rail Investment on Housing Prices in North-West Sydney

The study conducted by “Heather Macdonald, And Sumita Ghosh” included the main literature review of “local value of accessibility, travel characteristics of area residents and design characteristics of area residents”. “Local value of accessibility” relates to the elements of both push and pull characteristics which mediates the attractiveness of transit. The frequency, coverage and reliability of transit system are compared to the intensity of the traffic congestion which has resulted in various factors for accessibility in different locations. In areas where the transit systems serve the most employment and provide rapid and predictable alternatives in compared to the “time spent in private vehicle travel (and the unpredictability of traffic jams), transit accessibility is more likely to be valued” (Ewing et al. 2014). For instance, very few price effects from Miami Metrorail is there because the system has covered a very limited area. In addition to this, the bus routes have shown a more limited or no effect on the property values.

The review on the literature of “travel characteristics of area residents” shows that the transit accessibility is not equally valuable among all the residents. For instance, the study has revealed that smaller houses with simple travel requirement such as “working couples with no children and two full time jobs” are more likely to be better served by the transit systems than the families with children whose travel needs are more likely to be complex in nature. Therefore, the residents of more denser housing such as apartments and townhouses are more likely to value accessibility than the residents of the lower density with single detached homes. There have been divergent findings about the value of transit accessibility pertaining to “lower- versus higher income suburbs”. Some studies have been able to state that rail transit is more valuable among those individuals who are involved in higher paid occupations and concentrated in the CBD locations. These individuals are likely to be best served with high-volume transit. However, other researchers such as Bartholomew and Ewing stated that other individuals with lower income neighbourhoods are likely to be benefited with wider range of employment opportunities. The main differences may be attributable to the local employment structure and thus journey to work patterns (Dziauddin, Powe and Alvanides 2015).

The “design characteristics of area residents” and that is stations are more likely to have positive impact on the neighbouring properties if they are themselves accessible with ease. In other words, the designing of the surrounding area including the pedestrian walkability, safety and mix of clustered train station contrast between the walk-and ride and park-and-ride stations which is seen to affect the accessibility benefits and thereby outweighing any disaminities. For instance, the price discounts are evident for the home which are close to park and ride reliant stations however the positive effects for home property value further away from one station to another “where residents capture the benefits of easy parking at the train station”. Several other researchers have implied that accessibility to the light-rail stations have a more positive impact on the home prices especially for higher density homes and neighbourhoods with more street intersections per hectare. The importance of local urban structure is found with the differing price effects on the East and West side of the line in Minneapolis. It has been discerned that the properties on the eastern side were cut off from the various types of negative effects such as accessibility by freeway and industrial area alongside the line. On the other hand, the properties on the Western side had an easy walking access to the stations. The prices for the homes on the west side of the track were considerably high (Werner et al. 2016).

The paper analysed effects of new light-rail link on “dwelling prices by combining spatial and statistical analysis”. It is determined that the GIS has allowed to measure the “distances between the properties and Macquarie University rail station; the statistical analysis has estimated the impact of the variables in the models”. The main findings of the study have added to the growing literature that the property prices appreciated more before the commencement of construction and after the inauguration of the rail service in compared to during the construction and before the opening process. The main findings have further raised several questions on the “effects of new rail investment which has appeared to be capitalized into the existing housing prices earlier in Sydney when compared to other locations”. The main reason for rapid response of the property prices prior to the commencement of construction and after the inauguration of the rail link and decreasing during the construction has been explained with two reasons. Firstly, the access to train station in Sydney is valued more in compared to other areas. For instance, the relatively high pricing petrol in Australia and compared to US and high parking cost in the Sydney area is the main reason. The study sates that the perception of traffic congestion has added to the premium that the buyer place on a property which is convenient to it in service. Therefore, the effects of expectation for improved accessibility maybe the main reason for capitalization of housing prices sooner in Sydney and compared to other cities of US. However, the pushed prices have reached two unaffordable levels which has slowed down the demand which has been reflected with a slower rate of increase. Secondly, the improved access “may be less significant as a source of amenity for prospective buyers, and more important as an indicator of the redevelopment potential of land parcels adjacent to the new stations”. The study has found that the land or distant to the new station may have appreciated in value because of the perceived potential of higher intensity uses and the expectation that land close to train station will have better accessibility (D. Knowles and Ferbrache 2016).

Land value uplift from light rail Gold Coast City Council (GCCC)

On “20 July 2015 the Gold Coast City Council (GCCC) celebrated the first anniversary of Stage One of its $1.3 billion light rail (GCLR) system”. This paper relates to the distribution of economic benefits from the stage one investment in GCLR. The study has identified that the full suite of statutory land valuations in the “Gold Coast, Australia”, has estimated a marginal land value gains for direct accessibility improvements from the construction of new light-rail network worth $ 300 million. The different types of statistical difficulties in isolation of the marginal effects are based on the statistical model relevant with only the differential value gains in 2015 of 7.1% for the properties within 400 m proximity to the GCLR stations (Pilgram and West 2018).

As stated by Seo et al. (2018), The overall size of these gains has been relevant to the literature associated to connections (“relates to number of connections each node in the network has”) and network density (“the number of nodes in a given area”). The effect of literature review for GCLR has been evident with 9.5% average price increase which is similar to identifiable gains in Sydney for heavier station which is 4.5% and 8% of the total property value. The overall average rate as per the total land value in the GCCC area in 2015 is depicted to be 1.6%. The application of this average to the most conservative estimate of the marginal value gains attributable to the GCLR has suggested that there have been 84.8 million increases in the annual revenue which is an increase by 0.5% (Camins-Esakov and Vandegrift 2016).

The effect of new light-rail system has significantly affected the taxes levied by the state government. The marginal rate of tax increase is depicted with 1% and 1.75%. This is an increase of approximately $2.5 million in terms of annual land tax income from the value gains due to the GCLR project. The primary beneficiary of the public investment from the new infrastructure has been depicted with the landowners in the locations who have obtained an improved accessibility due to the construction of light-rail system. However, it has been discerned that in rare occasions the beneficiaries have contributed to the funding of infrastructure which are in proportion to the accrued benefits. This estimation is based on land value gains near the GCLR stations have suggested that the gains represent a more upfront value to the cost of “GCLR, even after the automatic increase in council rates and the incremental city-wide increase in the transport levy”. In addition to this, substantial scope of fund transport investment pertaining to the value gains is also apparent in nature (Salon, Wu and Shewmake 2014).

Impact on property value for “Bay Area Rapid Transit (BART)”

 “Bay Area Rapid Transit (BART) system” in the San Francisco Bay Area is very documented with the impact on property values of new housing developments near the transit stations. The literature of the study has included impact on property values with factors such as access to employment, developmental impacts, pedestrian accessibility and market penetration (Chen and Haynes 2015).

 The study associated with access to employment has suggested that there is generally a positive impact of proximity to the transit on property values. Some of the main questions encompassing this statement includes the main reason of increase in property values due to the construction of light-rail and why in more cases property values increase dining others. The main comparison with the Atlanta and Miami experience have shown that accessibility provided by the rail transit has it considerable impact on property values. Several evidences such as construction of light-rail in the Philadelphia area showed that the median home price was 3.8% above the homes which are not near the commuter rail. In addition to this, Census has revealed that in “Philadelphia suburbs in New Jersey near commuter rail lines operated by the Port Authority Transit Corporation (PATCO) demonstrated a median home price of 10% above those not near commuter rail” (Yu, Pang and Zhang 2017). The evidences from these experiences show that primary advantage to the properties near the rail over the others is depicted with accessibility factor that it manifests to the different types of properties. The residential properties became more attractive as the residents near the rail were able to experience a “more convenient access to the regional employment, retail, and cultural opportunities”. Additionally, the properties holding employment such as industrial sites and offices have increased access to the labor market. The office properties demonstrate a larger increase in the property value and compared to the industrial sites as the office building standard to cluster in a denser concentration which is more evident with light-rail transit system. That various types of properties are for the scene to be benefited from the rail transit contributions because of increased pedestrian traffic in terms of accessibility in the pedestrian oriented areas (Wagner, Komarek and Martin 2017).

The pedestrian accessibility test on the light rail have revealed positive effects of the transit on property values to those which were felt with very limited distance from the transit stations. This distance has been determined with a reasonable walk from the stations which in general is considered to be “one quarter mile to one-half mile”. Beyond the aforementioned zone the impact of proximity to rail on the property values is negligible. In the US that easier automobile access to station has limited effect on property values. This implies the significance of constructing more pedestrian connections to light-rail stations and enhancing the overall pedestrian environment around the stations (Higgins, Ferguson and Kanaroglou 2014).

The extent of the property value increase is also evident with market penetration of the transit system in the respective area. A comparison made from has been able to confirm this notion. A statistical analysis compared five light-rail systems in California- the “CalTrain commuter rail line connecting San Mateo County to San Francisco and San Jose, BART in the San Francisco Bay Area, the light rail systems Sacramento, San Jose, and San Diego”. The findings of the study revealed that the systems with highest rates of ridership reached to more locations within the respective regions such as “BART and the San Diego Trolley experienced the most significant association between distance from transit stations and property values”. It has been discerned that the property values in the aforementioned regions have increased more than $2 per meter the closer the property was situated to the new transit alignment. This effect was seen to be more prominent in some portions of the region than in others. It has been understood that “Proximity to the CalTrain commuter rail service, and the Sacramento light rail system and the San Jose light rail transit system” demonstrated a negative relationship due to proximity due to freeways near the light-rail tracks and heavy industry (Xu, Zhang and Aditjandra 2016). This comparison reinforces the notion that rail systems which enjoy the highest usage enjoys the greatest increase in the property values. This study has further reinforced the statement that rail transit accessibility is considered as one of the strongest determinants for the increase in property values (Vermote et al. 2014).

Some of the other studies on developmental impact of light-rail on property values has focused on comparing the effect of distance from the rail systems on the property values. As it has been mentioned previously, the comparison implies that the primary effect on property values is identified with the improvement in the regional accessibility which is brought by the investment in light-rail. However, it needs to be noted that the effect of proximity to “rail at one point in time fails to capture the second major effect of rail on property values” (Bohman and Nilsson 2016). The Rail transit makes the location near the transits more valuable for the potential development thereby increasing the property values in those regions. Secondly, the light-rail transit is more attractive for higher scope of development. It is often seen that the property owners decide which leads them to develop their vacant parcels for capitalizing on the proximity to transit. In several types of other situations, the existence of low-density use may be converted to a higher density use. The conversion of the properties implies additional value to them. In an informal survey property in “Hillsborough County in Florida” suggested that average increase in value of developed parcel within the urbanized core was depicted to be approximately $19,000 more than “underdeveloped parcels in the same urbanized core”. The review of the study from BART system, revealed that significant changes in land use and density around the highway intersections was seen to be more evident after the construction of light-rail transit system (Zhong and Li 2016).

The impact of a new light rail system on single-family property values in Charlotte, North Carolina

The main literature of the study considered the impact of light-rail system with sales price. The main understanding of the study has included a “hedonic regression model (hedonic price analysis)” at a block group scale to evaluate the “impact of a newly added light rail system on single-family housing values in Charlotte, North Carolina”. Majority of the research affords are cross-sectional and the study has proceeded with a longitudinal approach by repeating of same “hedonic regression analysis” at four different time periods including “pre-planning, planning, construction, and operation phase of the light rail system” (Kim and Lahr 2014). The various results from the study have shown that before the implementation of rail system “proximity to the future rail corridor had a negative influence on home prices”. The main reason for this is discerned with presence of industrial land-use zones around the existing stations. However, on comparing the four-time periods the prices of property have started to react positively due to the investment in light-rail in the operational phase. This has been suggested with increased accessibility to the reliable transportation and attractiveness of single-family houses within the proximity of light-rail stations. The positive impact is also predicted with the fact that several unattractive industrial uses have disappeared due to the light-rail investment. The great accessibility has been depicted by newly built light rail stations thereby increasing the attractiveness of these areas (Mulley et al. 2016).

The study has further introduced another relevant explanation stating that the increase in property values is evident that the concept of transit-oriented development introduced by “Charlotte land planning commission”. “It is likely that multiple-family houses or commercial properties have started to concentrate in the vicinity of light rail stations”. The study on “impact of a new light rail system on single-family property values in Charlotte, North Carolina” has used a distance of 1609 meters “(1 mile) around light rail stations to extract those single-family houses for which sale prices would potentially be influenced by the proximity to transit”. It has been discerned that the individuals dwelling in suburban neighbourhoods are willing to overcome the distance barrier for reaching to transit station than to those individuals living in dense urban areas. Some of the limiting factors of the study is identified with the time constraint and existence of spatially explicit regression models which has not been able to test the proximity of its fluctuations in the property prices from one station to another station (Clewlow, Sussman and Balakrishnan 2014).

Conclusion

The findings of the study from the consideration of various types of literature reviews have revealed that light-rail transit investments have proven to be having positive effects on the property values. In fact, it has been discerned that the effect of new fixed guideway transit investment is a twofold system. Firstly, the investment in the transit systems have improved the convenience for accessing the parts of the region from station locations. Secondly, the light-rail accessibility has enhanced the attractiveness of property thereby increasing the likelihood that the property can be redeveloped into a more valuable and put to a more intense use. The documentation on the impact of light-rail transit on the property values have focused on several factors. The property value premiums due to the increased accessibility has increased between 3% to 40%. The property value premiums with the ability to develop or redevelop the properties are dependent on the use of land and amount of development which can be permitted on the property. The study has further identified that a slight negative impact of rail on the property values are generally attributable to the visual intrusion, noise and the association of “rail right-of-way with industrial uses”.

It needs to be also identified that the transit agencies have several scopes to increase the property values with a fixed guideway investment. For increasing the effects of enhanced accessibility, the transit agencies can plan rail lines for better serving the developed clusters. There is also significant scope for orienting the operational plan to ensure maximum accessibility in terms of benefit by limiting the number of stops and planning for higher speed service. Additionally, the transit agencies of the scope for working with local jurisdictions for enhancing the accessibility of pedestrians near the station areas.

The enhancements such as increased density of streets, safety improvements and walkways will make an overall positive impact of light-rail transit on property values. For increasing the positive impacts, the transit agencies have the scope of assembling new development sites which can be undertaken by the joint development activities. Some of the severed other scope of study can include the impact of “Local economic conditions, the mix of land uses, and the relative value of accessibility given the resident profile, urban morphology, and physical characteristics of the location” on the property value. The potential for the historical research is depicted to be limited by data availability and time constraint which needs to be considered for realizing the impacts on the property values prior to construction of light-rail transit and after the construction process is complete.

References

Bohman, H. and Nilsson, D. (2016) ‘The impact of regional commuter trains on property values: Price segments and income’, Journal of Transport Geography, 56, pp. 102–109. doi: 10.1016/j.jtrangeo.2016.09.003.

Camins-Esakov, J. and Vandegrift, D. (2016) ‘Impact of a light rail extension on residential property values’, Research in Transportation Economics. doi: 10.1016/j.retrec.2017.04.004.

Chen, Z. and Haynes, K. E. (2015) ‘Impact of high speed rail on housing values: An observation from the Beijing-Shanghai line’, Journal of Transport Geography, 43, pp. 91–100. doi: 10.1016/j.jtrangeo.2015.01.012.

Clewlow, R. R., Sussman, J. M. and Balakrishnan, H. (2014) ‘The impact of high-speed rail and low-cost carriers on European air passenger traffic’, Transport Policy, 33, pp. 136–143. doi: 10.1016/j.tranpol.2014.01.015.

Knowles, R. and Ferbrache, F. (2016) ‘Evaluation of wider economic impacts of light rail investment on cities’, Journal of Transport Geography, 54, pp. 430–439. doi: 10.1016/j.jtrangeo.2015.09.002.

Dziauddin, M. F., Powe, N. and Alvanides, S. (2015) ‘Estimating the Effects of Light Rail Transit (LRT) System on Residential Property Values Using Geographically Weighted Regression (GWR)’, Applied Spatial Analysis and Policy, 8(1). doi: 10.1007/s12061-014-9117-z.

Ewing, R., Tian, G., Spain, A. and Goates, J. P. (2014) ‘Effects of Light-Rail Transit on Traffic in a Travel Corridor’, Journal of Public TransportationTransportation, 17(4), pp. 93–113. doi: http://dx.doi.org/10.5038/2375-0901.17.4.6.

Higgins, C. D., Ferguson, M. R. and Kanaroglou, P. S. (2014) ‘Light Rail and Land Use Change : Rail Transit ’ s Role in Reshaping and Revitalizing Cities’, Journal of Public Transportation, 17(2), pp. 93–112. doi: 10.5038/2375-0901.17.2.5.

Kim, K. and Lahr, M. L. (2014) ‘The impact of Hudson-Bergen Light Rail on residential property appreciation’, Papers in Regional Science, 93(S1), pp. S79–S97. doi: 10.1111/pirs.12038.

Ma, L., Ye, R. and Titheridge, H. (2014) ‘Capitalization Effects of Rail Transit and BRT on on Residential Property Values in a Booming Economy – Evidence from Beijing’, Journal of the Transportation Research Board, pp. 139–148. doi: 10.3141/2451-16.

Mulley, C., Ma, L., Clifton, G., Yen, B. and Burke, M. (2016) ‘Residential property value impacts of proximity to transport infrastructure: An investigation of bus rapid transit and heavy rail networks in Brisbane, Australia’, Journal of Transport Geography, 54, pp. 41–52. doi: 10.1016/j.jtrangeo.2016.05.010.

Pan, Q., Pan, H., Zhang, M. and Zhong, B. (2014) ‘Effects of Rail Transit on Residential Property Values: Comparison Study on the Rail Transit Lines in Houston, Texas, and Shanghai, China’, Transportation Research Record: Journal of the Transportation Research Board, (2453), p. pp 118–127. doi: 10.3141/2453-15.

Pilgram, C. A. and West, S. E. (2018) ‘Fading premiums: The effect of light rail on residential property values in Minneapolis, Minnesota’, Regional Science and Urban Economics, 69, pp. 1–10. doi: 10.1016/j.regsciurbeco.2017.12.008.

Salon, D., Wu, J. and Shewmake, S. (2014) ‘Impact of Bus Rapid Transit and Metro Rail on Property Values in Guangzhou, China’, Transportation Research Record: Journal of the Transportation Research Board, 2452, pp. 36–45. doi: 10.3141/2452-05.

Seo, K., Golub, A. and 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, pp. 53–62. doi: 10.1016/j.jtrangeo.2014.08.003.

Seo, K., Salon, D., Kuby, M. and Golub, A. (2018) ‘Hedonic modeling of commercial property values: distance decay from the links and nodes of rail and highway infrastructure’, Transportation, pp. 1–24. doi: 10.1007/s11116-018-9861-z.

Vermote, L., Macharis, C., Hollevoet, J. and Putman, K. (2014) ‘Participatory evaluation of regional light rail scenarios: A Flemish case on sustainable mobility and land-use’, Environmental Science and Policy, 37, pp. 101–120. doi: 10.1016/j.envsci.2013.08.013.

Wagner, G. A., Komarek, T. and Martin, J. (2017) ‘Is the light rail “Tide” lifting property values? Evidence from Hampton Roads, VA’, Regional Science and Urban Economics, 65, pp. 25–37. doi: 10.1016/j.regsciurbeco.2017.03.008.

Werner, C. M., Brown, B. B., Tribby, C. P., Tharp, D., Flick, K., Miller, H. J., Smith, K. R. and Jensen, W. (2016) ‘Evaluating the attractiveness of a new light rail extension: Testing simple change and displacement change hypotheses’, Transport Policy, 45, pp. 15–23. doi: 10.1016/j.tranpol.2015.09.003.

Xu, T., Zhang, M. and Aditjandra, P. T. (2016) ‘The impact of urban rail transit on commercial property value: New evidence from Wuhan, China’, Transportation Research Part A: Policy and Practice, 91, pp. 223–235. doi: 10.1016/j.tra.2016.06.026.

Yu, H., Pang, H. and Zhang, M. (2017) ‘Value-added effects of transit-oriented development: The impact of urban rail on commercial property values with consideration of spatial heterogeneity’, Papers in Regional Science. doi: 10.1111/pirs.12304.

Zhong, H. and Li, W. (2016) ‘Rail transit investment and property values: An old tale retold’, Transport Policy, 51, pp. 33–48. doi: 10.1016/j.tranpol.2016.05.007.