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Does The Overall Quality In The Supply Of An Urban Bus Service Affect House Prices? - A North-American Case Study

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  • Francois Des Rosiers
  • Jean Dubé
  • Marius Thériault
  • Marion Voisin

Abstract

This study aims at testing whether, and to what extent, the overall quality in the supply of an urban bus service translates into higher house values for properties located along the lines. Located 150 miles east of Montreal, Quebec City, with a population of roughly 560 000 (750 000 for the Quebec Metropolitan Area - QMA), is used as a case study. Operated under the RÈseau de Transport de la Capitale (RTC)1, Quebec Cityís bus network is composed of three types of routes:* In operation eighteen hours a day, seven days a week, the regular service offers 54 routes with frequent stops serving the whole territory; * Introduced in 1992, the MÈtrobus system was designed at improving the supply of public transport where most needed and operates on two additional routes. Essentially, this improvement consisted in an increased vehicle frequency coupled with fewer bus stops along main street and road sections of the agglomeration already served by a regular service, thereby linking more efficiently downtown areas with eastern (Beauport), northern (Charlesbourg) and western (Ste-Foy) suburbs during rush hours. In 1993, the public transit improvement program was further strengthened by the introduction of the MÈtrobus Plus, which provides an even more intensive service level between suburban locations and Laval University, located in Ste-Foy; * Finally, the Express service insures a direct link, with few stops, between residential areas and major employment and activity centers in the city. In operation on weekdays only and during rush hours, the Express serves Laval University and Ste-Foy shopping centres (17 routes) as well as downtown areas (21 routes). // While roughly 87% of all motorized trips in the QMA are car-based, supporting a high quality public transit service depends on how it improves accessibility to jobs and urban services, which, in turn, should be capitalized into higher property values. Hence the relevance of the issue addressed by this paper, particularly for planning authorities and local decision makers in search of sound financing devices for public transport infrastructures. From an analytic point of view, land and property prices are a combination of externality effects and location rents (Krantz et al. 1982, Hickman et al. 1984, Shefer 1986, Yinger et al. 1987,Strange 1992, Can 1993, Dubin 1998). Hoch and Waddell (1993) point out that the overlapping of access and neighbourhood characteristics leads to highly complex influences on rent levels and values. As shown by Des Rosiers et al. (2000), accessibility factors impact differently on locationrents depending on whether they operate at a regional or local level; moreover, measuringaccessibility to urban services is no simple task, since it involves both objective and subjective dimensions linked to household structure and individual mobility behaviour (ThÈriault et al. 2005a). Finally, the combination of access and proximity influences is mirrored in the nonmonotonicity of some of the distance functions which requires that specific transformations be applied before they can be adequately captured (Des Rosiers et al. 1996 & 2001). Most of the academic research reporting on the effect of mass transportation on property values or rents deals with either heavy or light rail systems. Such research includes Dewees (1976), Bajic (1983), Voith (1993), Gatzlaff and Smith (1993), Benjamin and Sirmans (1996), McDonald and Osuji (1995), Baum-Snow and Kahn (2000), Pagliaro and Preston (2003) and, more recently, McMillen and McDonald (2004). The literature review by Smith and Gihring (2004) on value capture financing provides a quite extensive picture of international related experiences: although the extent of the impacts varies from place to place, the implementation of a new rail transit system generally results in significant rises in both residential and commercial property values, mainly around railway or metro stations. There are reports, though, of price drops for dwellings adjacent to such stations. Very few studies have been found that address the impact issue in relation to the implementation or improvement of a bus service. So et al. (1997) examined the importance of transport on house prices in Hong Kong. As do the vast majority of authors, they use hedonic modelling to control for various internal attributes and environmental characteristics, measuring transport accessibility as the distance to nearest stop on the mass transit railway (MTR), bus or minibus route. Dummy variables are also used to account for dwellings located within a 10 minutes walk from a transport node. While results reveal an insignificant explanatory power for bus routes, accessibility to minibuses emerges as the most influential effect on house prices. In Brisbane, Australia, a study by the Real Estate Institute of Queensland (2001) shows that the median house price of properties located in suburbs both directly alongside and near the South East Busway rose, on average, by a percentage of 10.1% between June and September Quarters 2000, as opposed to 3.0% elsewhere, thereby suggesting that commuters tend to place more emphasis of an easy access to the CBD. Finally, preliminary findings from a recent research by Des Rosiers et al. (2005) on Quebec Cityís MÈtrobus service suggests that improving mass transit in central, high-density corridors may raise house prices by as much as 7,4% above and over average value appreciation while properties in more remote locations may suffer a 1,9% price drop due to nuisance effects. This study first relies on a data base of some 12 000 house sales that took place in Quebec City over the 1993-1997 period and which provides reliable information on sale prices and conditions, unit location and property characteristics. It also benefits from a regional GIS which includes detailed information on the local bus network, with buffers along the routes and near stops being used in order to isolate accessibility from proximity effects. Using the hedonic approach, it is possible to isolate and measure the externalities, either positive or negative, deriving from various quality levels in the supply of mass transit facilities, depending on the type of route (regular, MÈtrobus and Express), the service frequency (number of vehicles and hours of operations) and the period considered (weekdays, Saturday and Sunday). As shown by Des Rosiers et al. (2005), the higher the mass transit modal share in a given neighbourhood, the higher the progression of property values. As the bus service modal share is the combined result of supply of, and demand for, public transit facilities, it can be assumed that house prices will be affected differently depending on the intensity and regularity of the local bus service. Also, the changes in the professional status of women over the past decades and the ensuing growth in female car ownership result in long distance mass transit services having less influence on the house location choice process (ThÈriault et al. 2005b). Finally, the evolving competition among shopping and leisure alternatives in urban areas also acts upon modal choices by individual and households (Biba et al. 2004; ThÈriault et al. 2005c). On such grounds, it could be expected that the strongest and lowest impacts on prices will be obtained for the MÈtrobus and Express services, respectively, with regular routes exerting an intermediate effect. This research will allow for further investigating the role of public transit accessibility in the shaping of property values in a mid-size, North American city. More specifically, it will provide more insight into how the supply quality of an urban bus service may affect residential values.

Suggested Citation

  • Francois Des Rosiers & Jean Dubé & Marius Thériault & Marion Voisin, 2006. "Does The Overall Quality In The Supply Of An Urban Bus Service Affect House Prices? - A North-American Case Study," ERES eres2006_171, European Real Estate Society (ERES).
  • Handle: RePEc:arz:wpaper:eres2006_171
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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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