Hedonic Value of Transit Accessibility: An Empirical Analysis in a Small Urban Area
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Discussion

Does better access resulting from transit infrastructure increase the value of adjacent properties and buildings? This study explores the impact of bus transit on the lease rate of residential properties in a small urban area. The results show that vehicular accessibility increases the rent of apartments. In particular, all else equal, vehicular travel time to the CBD (the longer the time, the lower the accessibility) is negatively associated with the rent; apartments on cul-de-sacs (less accessible) tend to have a lower rate than other apartments. However, transit accessibility appears to have a negative impact on the value of apartments. Specifically, after controlling for other factors, apartments located within 1/8 mile of bus routes tend to have lower lease rates than other apartments.

"Better access means rising market value for adjacent properties and buildings" (APTA undated, p.2). Why does providing bus transit seem to lower property value in general (e.g., Bina et al. 2006a), and in Fargo in particular? This study speculates that this observed relationship can be attributed to the twofold. First, the negative impact of transit infrastructure on apartment rent is the net effect of a weak positive accessibility effect and a negative nuisance effect. The population affected by the transit accessibility is so narrow (mainly transit dependents) that improved accessibility cannot trigger any substantial impacts on residential properties. Although bus transit provides an additional travel option for people in a region, it has a limited ability to improve accessibility of people because Americans overwhelmingly rely on private vehicles for their daily activities. This also holds true for apartment dwellers. In small urban areas, auto dependence is even more prevalent since, historically, people in these areas tend to be independent and have little knowledge/experience about public transit.

Transit itself may have nuisance effects such as noise, crime, and negative image. The noise from rail transits can be a problem (e.g., Chen et al. 1998). However, a bus is not likely to be a major source of noise; at most it is a large vehicle. Transit may also carry negative public perceptions and hence decrease the value of adjacent properties. Transit-related crime is a well-known phenomenon in large metropolitan areas in the United States (Loukaitou-Saderis et al. 2002). Public concern over safety and security is one of the major reasons that some people live away from transit stations and do not use them (Ingalls et al. 1993). However, safety is not a major concern in Fargo. Compared to the national average, Fargo has a much lower crime index. And according to the MAT, there is no pattern of transit-related crimes in Fargo although the neighborhood around the Ground Transportation Center (a transfer location), actually downtown Fargo, has a relatively high rate of crime. Negative images of public transportation may matter. There are many web-based debates that transit riders are treated as second-class citizens by other people and even the federal government. These negative images may deter some renters from living close to bus routes and hence decrease the values of adjacent apartments.

Second, proximity to bus routes may act as a proxy for other factors. One of the fundamental functions of public transit is to provide travel alternatives for transit dependents, and ridership is the centerpiece for initial route design and any further extension of the transit network given budget constraints. Transit agencies tend to prioritize services for neighborhoods accommodating many transit captives who are lowincome, disabled, elderly, and/or have no personal vehicles. The availability of transit services may also attract transit captives into such neighborhoods. In Fargo, most bus routes were intentionally designed to connect low-income neighborhoods with workplaces and services. For example, many low-income people live in the southwestern corner of I94 and University Drive where a Kmart is located; many elderly people live in the neighborhood around 32nd Avenue North where services are relatively abundant; the bus route along 32nd Avenue South was designed to connect public housing (Figure 2). Therefore, it may be these neighborhoods, rather than the transit system, that cause the low lease rate of apartments close to bus routes.

The CBD tends to have a dense transit network. In Fargo, the neighborhood around the east end of Main Avenue is the traditional center (Figure 2), which was built in the late nineteenth century. Compared to the apartments in outer suburbs, apartments in the CBD tend to have a lower lease rate due to the appearance and functionality of older apartments. Therefore, the impact of bus transit can be a surrogate for the age of apartments. This study found that older apartments tend to have a lower lease rate. In addition, decentralization can reduce the advantages of a central location and, hence, lower the value of apartments in the CBD (Giuliano, 2004). Because many businesses and services have moved to the regional shopping center around 13th Avenue South mentioned later, downtown Fargo has been losing its attractiveness as a center, and its surrounding areas have gradually become low-income neighborhoods.

The agglomeration of businesses has the potential to attract more consumers than a single business. For the convenience of both consumers and employees, transit agencies tend to establish extensive routes in commercial districts. Commercial districts may have nuisance effects such as noise, traffic congestion, and shortage of on-street parking. In Fargo, the northwestern corner of the intersection of I29 and I94 is the regional shopping center where many strip malls and small businesses are clustered. The streets in this area are the busiest, especially during the weekend. Therefore, the low rent of apartments close to bus routes may result from their proximity to commercial districts and busy streets.

Overall, bus transit seems to have little impact on improving accessibility and increasing property value. Based on previous research and the information from local authorities, the negative association between transit accessibility and apartment rent is more likely to be a result of spurious relationships: proximity to bus routes is a surrogate for other factors. Although this study finds that bus transit lacks the potential to increase the value of apartments, this result does not intend to discourage the continuing investments of transit infrastructure. In the data, 7.5% of apartment dwellers took a bus to grocery stores or shopping malls at least once per month, and 13% have taken a bus to go shopping. Therefore, transit services play a crucial role in improving the mobility and, hence, quality of life of a niche market.

References


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