Homes with great transit access are extremely rare in U.S. cities. Less than one percent of homes that are listed for sale today are considered to be in a rider’s paradise (Transit Score of 90 and above). Yet in a survey of more than 1,300 people who bought a home last year, more than one in five said they wish they had paid more attention to the length of their commute from their new homes.To estimate how much transit access is worth when buying or selling a home, Redfin looked at the sale prices and Transit Score ratings of more than one million homes sold between January 2014 and April 2016 across 14 major metro areas.Here are the price premiums of one point of Transit Score on a home, grouped by metro area.
|Metro Area||Transit Score||Median Sale Price||$ Premium of 1 Transit Score Point on Median Home Price||% Premium of 1 Transit Score Point on Median Home Price|
On average, across the 14 metros analyzed, one Transit Score point can increase the price of a home by $2,040. But the price premium varies widely from metro to metro. One point of Transit Score in Atlanta bumps up the price of a home over one full percentage point, or $1,901.
“It’s easy to see a value premium for a home located near one of the main commuter lines in the metro area because walkability and access to public transportation are relatively rare in Atlanta,” said Redfin real estate agent Rory Haigler. “Atlanta is known for its traffic, so more and more, I’m working with homebuyers who want to be closer to a train or bus line for commuting to and from work. Some people even commute from the suburbs to park near a transit line to get into the metro area because it is easier than driving.”
In Orange County, the effect is small, but being convenient to public transportation actually makes a home less valuable, by $200 for an average home.
“Most people in Orange County prefer to drive their own cars; few would consider any other way to get around,” said Redfin real estate agent Keith Thomas Jr. “Parking is easy to come by and traffic isn’t bad, so it makes sense that public transit doesn’t impact the price of a home the way it would in a more urban area like L.A.”
“Transit is an important building block to economic mobility,” said 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.”
These estimates compare homes by controlling for differences in property and neighborhood characteristics, including property size, number of bedrooms and bathrooms, age of the building, type of property (single-family, condo or townhouse), neighborhood median income and total employment, and controls for market conditions (appreciation over time) are also built into the model. In all metro areas, a home located in a more transit-friendly neighborhood was more expensive than the same home in a less transit-friendly location, with the exception of Orange County.
Click here to see Redfin’s 2016 report on the top 10 U.S. cities for public transit.
Analysis by Sheharyar Bokhari, Researcher for The MIT Center for Real Estate:
To estimate how much market value homebuyers implicitly attach to a higher Transit Score, Redfin used a hedonic regression. This type of modelling is like a “comps” analysis done by real estate appraisers. The regression makes an apples-to-apples comparison between properties by controlling for different characteristics, to compare the prices of properties with different Transit Scores, “all else being equal.”
The same set of sample properties and the same hedonic regression method was used in a 2016 Walk Score study. Both this study and the 2016 study were inspired by a 2009 study, “Walking the Walk: How Walkability Raises Home Values in U.S Cities” by Joe Cortright of Impressa, Inc. The variables used in this analysis are similar to those in the 2009 study with the exception of distance to a central business district, which was unavailable for our data. In addition, we also controlled for historical real estate market conditions.