When it comes to your living arrangements, most people focus on the home or apartment. You have in mind what you’re are looking for in terms of space and building materials. And when you find the right place, especially in the right price range, it can feel like you’ve hit the jackpot. But there might be something you’ve overlooked. Once you move in, you will need to find a way to get to work. For those living in an urban area, commuting often means turning to public transportation. And while the ease of public transit is a draw for city dwellers, it can be difficult finding a home close to the bus or train you need. It is well known that access to public transportation increases a property’s value. But just how much are people willing to pay to quickly access public transit? Economists at Redfin set out to find that answer. Looking at 14 metro areas and comparing the Transit Score and sale prices of homes, Redfin determined price premiums in each.
Redfin found that great transit access is hard to come by in American cities. Less than 1% of homes for sale are considered to be a “rider’s paradise”, meaning the property has a transit score between 90 and 100. However, even though few can find these dream transit spots, small increases in transit scores still seem to have a large impact on the price tag of homes. In analyzing the data, even one transit point can have a positive increase on the value of your property. On average, a one point increase in the Transit Score resulted in a 0.6% increase in the sale price. Less than 1% doesn’t sound particularly impressive. However, this amounted to an average increase in the sale price of $2,040 across the 14 areas! And while an increase in Transit Score coincided with a price premium, that price increase varied by metro area.
13 of the 14 metro areas examined saw increases in sale prices as the Transit Score increased. The one exception? Orange County, California. This posh California area actually saw a small decrease in home value, about $200, for homes located near public transit. Researchers explain that here, traffic isn’t as bad in some metro areas, like Los Angeles, and access to parking is readily available. As such, most people utilize a car as their main source of transportation. Few, in fact, consider using any other method to get around, including public transit.
For those living in a city, a car is not always the best commuting option. Heavy traffic and lack of parking leave many dreaming of the ease of riding a bus or train. Instead of pulling your hair out behind the wheel, you can relax as someone else gets you to and from work. So as you embark on your house hunt, keep public transit in mind. If you’re like the more than one million home buyers in Redfin’s study, you’ll be willing to splurge if it means easy access to the bus stop.
Curious where your area fell? Below are the 14 metros Redfin utilized in the study and the corresponding data.