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The Impact of Transit Investment on Housing Values: A Simulation Experiment

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  • A Anas

    (Urban and Regional Planning Program, Department of Civil Engineering, Northwestern University, Evanston, Illinois 60201, USA)

Abstract

This paper uses a joint-choice logit model of travel demand and residential location to simulate the impact of urban rapid-transit investment on housing values within a radial corridor. The model developed is a clean break with the traditional urban economic theory. Instead the heterogeneous nature of travel and location decisions is recognized and the logit model, consistent with stochastic utility maximization, is employed. Simulation experiments reveal that the aggregate increase in property values caused by transit's impact on work trips is highly sensitive to the aggregate number of vacancies within the corridor. Under reasonable assumptions, transit investment tends to lower central-city property values, to increase central-city vacancies, and to raise suburban property values. It tends to help the poor move further away from the center and penetrate the inner suburbs. Depending on several influences, aggregate property values can increase or decrease and the change can often be statistically insignificant. Calculations show that an equitable taxation (and compensation) of property-value changes may raise a small to modest proportion of a transit system's construction cost. Several considerations suggest that even these modest estimates might be optimistic. These results help develop an improved perspective on ‘value-capture policy’ which has not, up to now, benefited from quantitative analysis. Major extensions of the model are briefly considered.

Suggested Citation

  • A Anas, 1979. "The Impact of Transit Investment on Housing Values: A Simulation Experiment," Environment and Planning A, , vol. 11(3), pages 239-255, March.
    • Handle: RePEc:sae:envira:v:11:y:1979:i:3:p:239-255
    DOI: 10.1068/a110239
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    References listed on IDEAS

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    1. Anas, Alex, 1980. "A probabilistic approach to the structure of rental housing markets," Journal of Urban Economics, Elsevier, vol. 7(2), pages 225-247, March.
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    Cited by:

    1. A Anas, 1980. "Evaluating the Effects of Transportation—Land-Use Policies on Housing Values and Household Welfare," Environment and Planning A, , vol. 12(7), pages 747-764, July.
    2. Allen, W. Bruce, 1987. "Value Capture in Transit," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 28(1).
    3. Xiyan (Jamie) Wang, 2017. "Subway capitalization effect in Beijing: Theory and evidence on the variation of the subway proximity premium," Papers in Regional Science, Wiley Blackwell, vol. 96(3), pages 495-518, August.
    4. Paul A. Longley & Richard Dunn, 1988. "Graphical Assessment of Housing Market Models," Urban Studies, Urban Studies Journal Limited, vol. 25(1), pages 21-33, February.

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