While it’s clear from Chicago’s Transit Oriented Development (TOD) boom that access to public transportation is highly valued among younger renters choosing to forgo car ownership, how exactly does proximity to transit effect pricing for homebuyers? By skimming real estate listing notes it’s pretty obvious that transit is a selling point, but to what actual extent does it move the needle?
To answer this question, Redfin has taken sale prices of more than one million homes sold between January 2014 and April 2016 across 14 major metro areas and correlated the data with an incremental increase in so-called “Transit Score.”
Similar to the Walk Score metric used to measure the walkability of an area, the Transit Score is a 1 through 100 ranking scale that measures the usefulness and convenience of public transportation—be it bus, subway, light rail, cablecar, ferry, or water taxi—near any given location.
In the Chicago metro area, the Redfin report found that one additional point of Transit Score increased the value of a home by 0.79%, or on average $1,731 per point based on median home price. That means that in Chicago, a home with a transit score of 85 would fetch a significant 7.9% price premium over a similar nearby home with a lower transit score of 75.
“Transit is an important building block to economic mobility,” explained Redfin chief economist Nela Richardson. “The more that cities invest in good transit the bigger financial impact for homeowners and the better access families of all incomes have to jobs and public amenities. Transit is an economic win-win for communities.”
While Chicago’s 7.9% figure didn’t quite match the higher premiums that transit-friendly homes in markets such as Boston, Seattle, Atlanta, and Washington DC were seeing, the Windy City was close to the upper end of the spectrum among the 14 metros surveyed.
Conversely, in places like Phoenix and San Diego, the per median sale price gains were not nearly as dramatic. California’s Orange County was an extreme outlier with an increase in access to public transit resulting in a negative—albeit small—effect on comparative home values.
- Report: how much more will Chicagoans pay for greater walkability? [Curbed Chicago]
- Chicago Real Estate Market Report archives [Curbed Chicago]