Extraordinary Observations

As a follow-up to yesterday's call on President-elect Obama to launch a "transit space race" - more should be known about the market for transit and transit-oriented development in America. How do we know that people want to live and work near transit? The open market tells us so. Matt Yglesias points out the semi-obvious:

Seriously, these trends show the need to build more and better transit lines and also to allow for greater density near our key transit nodes. These areas are desirable, which is great, but we don’t need to live in a universe where they’re so rare that only rich people can afford to live in them. We need to make the transit services that there’s clearly demand for, and given that building rail lines is expensive we need to make sure that the housing supply in their immediate vicinity grows robustly.

Houses, condos, and apartments near transit lines in America are already selling at a premium because... wait for it... the demand greatly outstrips the supply. There is also empirical evidence that the premiums are continuing to increase, even as home prices across the board tumble. In Denver, for instance:

Margarete Humphrey knows her bungalow near the Louisiana Station light-rail stop is in a hot neighborhood. But she was surprised to learn the value of her home has increased over the past two years as much of the metro Denver housing market has declined. Homes near light-rail stations along the southeast line, which opened in November 2006, have increased by an average of nearly 4 percent over the past two years, according to an analysis by Your Castle Real Estate. But the rest of the Denver market declined an average of 7.5 percent. "I know that it's always been a good neighborhood, but I didn't think it was like that," said Humphrey, who doesn't drive and frequently uses public transportation. The closer a home is to the station, the more its value increases, according to the Your Castle analysis. Homes less than a half-mile from a station increased an average of 17.6 percent, while those 1 1/2 to 2 miles away increased just 0.1 percent on average.

It isn't surprising that some of the biggest housing bubbles in America occurred in states like California, Arizona and Florida, in distant, car-oriented, low-density suburbs of Los Angeles and Miami, where transit is virtually non-existant. It also isn't surprising that some of America's hottest neighborhoods are located on or near the few existing transit lines. We know a neighborhood is truly hot when those with enough money to live virtually anywhere choose to live in one particular place or another. Imagine the cities of the future we can build, with highly-dense mixed use developments clustered around transit stations and connected to each other by those lines. The potential is both huge and exciting.