How Rail Impacts Home Values

posted in: Who gets hurt | 0

Will Your Home’s Value Go Up or Down with the New Light Rail?

Proponents of the Durham Orange light rail frequently say that studies say home values near light rail stations are likely to show a modest increase in value, which is true, but not the whole truth. It would be more accurate to say that when a new light rail station opens up many homes that are approximately one quarter mile from a station are likely to increase in value while others lose value. There are cities that have not seen an effect one way or the other on home values, most likely because the homes that lost value cancelled out the gains by the homes that increased. The downward pressure on property values is due to what is referred to in these studies as the “nuisance factor” while the upward pressure is due to increased transit access.

If you want to know how a nearby light rail installation is going to impact your home’s value, it’s best not to take a one sentence summary of how, on average, it impacted a narrowly selected group of homes in a vastly different city: “home values go up!”. Instead, become familiar with the relevant factors that influence home values to go up or down and determine as objectively as you can how much each of those factors are relevant to your home. You might want to pass your analysis by a friend or relative who lives outside the light rail area; it’s often hard for any of us to be ‘objective’ about our own home.


Light Rail Factors that Tend to Increase Home Values

Increased Transit Access

Most cities see at least some average increase in home values for homes that are within easy walking distance of a new light rail train station. This can show up in apartment rents as well as in the resale value of townhomes and single family detached homes.

The reason that the value increases in response to a station can be summed up in one phrase: increased transit access. The worse the transit access was before the new station the stronger the effect. For example, if a home was 2 miles from a major thoroughfare and had no bus stop within walking distance, a light rail station coming up a mere quart-mile away could add a kick to the home’s value (assuming no negative factors, as I describe further on).

The bigger the increase in transit opportunity from before to after the station is built, the bigger the boost is likely to be. On the other hand, if the nearby new light rail station comes in as a replacement for a previously existing bus rapid transit (BRT) station then the home would probably see no noticeable positive change in value whatsoever, and may even go down in value if the train tracks or a railroad crossing were too close by.

Here in Durham or Chapel Hill the access that is most important is access to major roadways. If your home already has quick access to a major thoroughfare such as I-40, 147, 15/501, 85, or route 54 then a new nearby rail station’s power to raise it’s value will be significantly muted because the home already has excellent transit access built into its price. The odds are very high that excellent access to one or more of those roads played a part in your decision to buy your home, and you may have paid more or compromised on other attractive factors (floor space, size of kitchen, etc.) to get that access.

A Widely Connected and Fast Public Transit System

The more connected the public transit system is to a wide variety of desirable destinations and the faster it can get you to those places, the more valuable the access to that system is. Stellar examples of this kind of system would include the elevated trains in Chicago, which can take you out to O’Hare International Airport as well as throughout throughout the city, or the New York subway system. You can transfer between trains in these two cities easily and without paying additional fees. Neither are light rail, they’re just good examples of high access; there are less well known systems that are light rail that also have high access, such as in the state of Texas.

Having to switch from rail to bus to get places is less attractive, primarily because of the time it consumes. Speed is a key factor. If the potential buyer/renter has a car and can get to work faster by driving then they’ll see the public transit option as a backup, for use if the car is being serviced, but they aren’t likely to pay more for it. There are people who have political beliefs that suggest it is better morally to ride public transit than to drive and so they may be more interested in a home near a train even if it slower than driving, but these people are a small minority.

A public transit system that has less complete coverage of the local area will also be less valuable to potential buyers or renters. A train that goes nowhere near your workplace isn’t of much value to you.

The Durham Orange Light Rail as planned will average 24 miles per hour (see A Longer, Slower Commute). For this reason and others the car owners are more likely to see the train as a nice backup for when the car is being serviced if they happen to work or go to school at a Duke or UNC facility. Over the past 30 year I have worked at five different locations in Chapel Hill and Durham, and one location in Research Triangle Park. The Durham Orange Light Rail does not stop anywhere near any of my past work locations and so, if it existed at that time, it would not have ever been of any use to me.

This train is slow and its destinations are severely limited; its ability to add value to nearby homes is seriously hampered by these factors.

Home is in the Right Price Range

Large elegant homes would not increase in price due to a nearby light rail station. The people who buy or rent such homes will see no advantage to having nearby public transit because they won’t be using it.

The more a home falls into a price range that is sought out by people who are big users of public transit, the more being a short walk from a light rail station is likely to give a home value a boost. A broad generality, then, is that lower rents and small, inexpensive homes are more likely to get a boost than more expensive homes.

Note that in the Triangle most individuals have cars and most couples have two cars. People who cannot afford a car per adult are likely to see a home within a walk to public transit as more valuable, but they are also going to have limited funds to pay for such a home.

Durham and Orange County officials are aware of this factor. To boost train ridership they are negotiating with real estate developers to add a large number of “compact” homes, including low-income housing units, within a short walk of certain train stations. These will be small apartments and townhomes for the most part; there will be no single family detached homes. The prime targets for this development are Patterson Place and Leigh Village.


Light Rail Factors that Tend to Decrease Home Values

The Nuisance Factor

If “increased transit access” sums up the positive influences light rail has on home values when the homes are a quarter mile walk from the station, then “nuisance factor” describes the negative pressure on those values. The nuisance factor is actually a name for the effect of a number of different factors which may work together to bring down the value of a residence by either neutralizing a bump it might have otherwise received or, worse, by causing the home’s value on the market to fall.

Noise and Vibration

Light rail generates significantly less noise then other trains, and this makes it less dangerous to home values than other rail. Proponents will tell you that light rail is “quiet”, but quiet is relative. Light rail definitely brings noise pollution in the areas it passes through, particularly where it crosses roads. The train itself simply riding by can easily generate readings of 60 to 90 decibels (90 is 8 times as loud as 60), and Seattle’s unfortunately named “Sound Transit Light Rail” is generating 100 decibels just passing through certain places, not including its horn or a railroad crossing. The transit authorities will predict 60 to 65, and that is likely to be true in most areas, but significantly louder is not uncommon, significantly lower is uncommon, and it is impossible to predict what the decibel level will be at any given location. If the train is planned to pass very near your home you may want to raise your voice before construction begins.

Railroad crossings often make very loud noises to get through to drivers who may have the windows closed and radio on. In addition, the train itself sometimes is required to warn of its approach with multiple loud and long blasts from its horn at approximately 100 decibels, 16 times louder than the 60 decimals that are predicted for this “quiet” train. It is required to be between 96 and 110 decibels. A residence that is particularly close to this kind of intersection will vibrate noticeably with that level of sound. It will also be rejected by most potential renters and or buyers, and reducing the asking price will likely be necessary to get the home rented or sold.

If a home is close to the tracks, but not close to a railroad-auto intersection, the strength of the impact on the home’s value will be determined by the details of the environment. I’ll give two sharply different scenarios to demonstrate how this can be so.

Scenario One.
You live in a single-family home in a busy metropolitan area, and your backyard is separated from a very busy avenue by a 6 foot tall wooden fence. The traffic on the avenue is about 40% trucks of a wide variety of sizes, and a firehouse is two blocks up the road. Fire and/or police sirens are heard multiple times per week as emergency vehicles rush down this avenue. A new light rail is being put in, which will sit behind your back fence, between your fence and the soon to be widened busy avenue.

In this case your home may be impacted by other factors, but it will not be negatively impacted by the light rail being put in between you and the avenue. The nuisance factor of the avenue is high enough to completely mask the nuisance factor of the light rail, and the avenue is already figured in to your home’s worth.

Scenario Two.
Let’s look at the opposite extreme. You have a 3,500 square foot house in excellent condition that backs up to one of the Triangle areas large parks. You have your morning coffee on the back deck while enjoying a beautiful view of the woods and the stream that passes nearby.

They put in a light rail track just past your property line between you and the park.
The quality of life at your house just dropped dramatically, and your market value went with it.

No, they won’t do this, it’s just a hypothetical. It’s extremely unlikely that they would put a train where it will disrupt high-end homes.

One last note on noise: it is difficult at best to predict how much noise being near a light rail will bring. If a track is going to be put in very close to your home then you might consider asking the transit authority to do a noise level test before any changes are made, including the removal of trees that may now be buffering noise. After all is done a second test can be done for comparisons. If you have before and after measurements that show a large increase in the volume of noise you will be in a better position to request a sound barrier. However, if the overall measurement is deemed to be within a level acceptable to the authorities then you are not likely to get help.

If the rail is going to be close to your home. It would be unwise to count on simple assurances that the train is quiet. It is quieter than a non-electric train, but those trains can be extremely loud. At least some light rail systems have seen fit to put up sound barriers between homes and rail tracks under certain circumstances.

Traffic and Railroad Crossings.

Railroad crossings can be another significant nuisance factor, even when not factoring in how loud they are. The Durham Orange light rail will be sending out trains every 10 minutes during the heaviest traffic periods of the day. This will mean one train going towards UNC every 10 minutes plus one headed towards Durham every 10 minutes, or a train going through each crossing on average every five minutes. If your residence is situated such that you must go through a railroad crossing to get home or to get from your home to services (food store, school, Starbucks,) or to major roadways such as routes 15-501 or 54, then this should be considered a nuisance factor. It is a reduction in the transit access (and increase in frustration) and it will take you longer to get to places, and therefore a reduction in market value.

New Home Construction.

New home construction can reduce your home’s value if the two compete on the market. Simply put, potential buyers have more options, and it is often the case that new trumps previously existing. If you are in such a market and need to sell a house you should invest the time and money to update your home so that it looks as new and up-to-date as possible. A good real estate agent can help you decide on paint colors and on how to ‘stage’ the home for best presentation. This is always a good idea, but it is particularly needed when competing with newer homes.

There are new development projects planned in Durham that are designed to add a large number of “compact homes”, including needed low income housing units, in at least two areas: Patterson place and Leigh Village. These are each designed to be within a short walk to a to a rail station, but not too close to the tracks or a railroad crossing. Durham is encouraging these projects and considering possible subsidies and/or relaxation of some of the usual requirements placed on such development. The plan is to create higher density (more people per acre,) and needed low income housing, and create demand/ridership for the train.

Simply put, these projects are a form of urbanization of what are currently suburban areas, far from the centers of the cities of Durham and Chapel Hill.

The new homes in these locations will most likely be apartments, townhomes and possibly condominiums. “Compact” is the key word.

These homes will compete with existing apartments and townhouses that already exist at Patterson place. The existing Five Oaks and Crystal Oaks townhouses, and possibly the small single-family homes at Pope’s Crossing, will find themselves competing with new development for the entry-level homeowner who will now have a wide array of options to choose from. This new high density development will also bring significantly more auto traffic to the area.

Neighborhood: Location, Location, Location

When a real estate agent is ready to list your home he or she will do an objective appraisal by looking at the homes in your neighborhood that have sold most recently. The average cost per square foot of heated space in your neighborhood will put limits on how much you can reasonably ask for your home. If a number of homes in your development are in the sweet spot of about one fourth of a mile from a new rail station or bus stop that connects to a robust transit network then the odds are you may get a tiny benefit even if you are a full mile from the station simply because your home’s worth is tied to the value of homes in your development.

However, if other homes in your development are too close to the new rail track, a railroad crossing, increased car traffic from a park and ride, or an area subject to a train horn, then your home’s value will take a hit even if you don’t live in the specific area affected. If homes in your neighborhood are downgraded then this will impact you; that’s part of why homeowner’s associations monitor home maintenance.


In Conclusion

When a new light rail installation is planned near your house and you’re wondering how or if it will affect the market value of your home there are many factors to take into consideration, and the interaction of these can be complicated.

A significant increase in transit opportunity, being able to quickly get to where you want to go, can give your home a boost as long as a station is about 1/4 mile away. Being either much closer or much further away reduces the effect, and at half a mile the effect disappears altogether.

Increased public transit access will have less positive effect if your neighborhood mostly attracts automobile owners, as almost all Triangle neighborhoods do.

Increased light rail access will have more effect to the degree the rail has wide connectivity. The current rail project is one 17 mile line which can help people get to UNC or Duke facilities, but the stops it makes represent a truly tiny fraction of what is available in the area, effectively minimizing its usefulness.

Additionally, at an average of 24 miles per hour the train will be slower than driving, even during rush hour traffic. This is documented in Triangle Transit’s own information displays, and they’re assuming nobody drives faster than the speed limit!

The Durham Orange Light Rail as planned makes multiple at-grade road crossings, which will frustrate drivers and reduce the access that multiple neighborhoods now have to major roadways. That access is currently supporting home values in those neighborhoods, thus the rail is putting downward pressure on home values even when the homes are not adjacent to the tracks.

Tight proximity of the rail line to existing residences brings significant noise to homes that have so far enjoyed quiet neighborhoods. We are not an urban area that includes constant, loud traffic and construction noise. Neighborhoods that have noise added to them from running trains, railroad crossings, and train horns are likely to suffer not only from the noise, but also from the nuisance factor effect on their home values. Other nearby neighborhoods will be able to draw away buyers specifically because of the lack of train noise, especially train horn blasts and railroad crossing bells.


When you look at the actual studies which find an overall increase in home values for a small number of homes that are situated at optimal walking distance from a light rail station, and you look at the results with an understanding of how homes values fluctuate with specific advantages and disadvantages it becomes clear that the majority of homes near the Durham Orange light rail will see little to no increase in value while some will see a definite, possibly strong negative effect. Which category does your home fit into?



The Durham Orange Light Rail has NOT Achieved Final Approval, and the State of North Carolina is Leaning Against Funding it. Add Your Voice to Ours and Help

Stop the Train!