The ARC Effect: How Better Transit Boosts Home Values And Local Economies
A statistical analysis of the effect of three recent improvements to NJ TRANSIT’s rail system on home values predicts that ARC – a new commuter rail tunnel to Midtown Manhattan – could add a cumulative $18 billion to home values within two miles of NJ TRANSIT and Metro-North Port Jervis and Pascack Valley train stations. This, of course, is just one of ARC’s several long-term economic benefits, which also include an overall increase in the region’s economy, new jobs on both sides of the Hudson, higher personal incomes, higher commercial property values, and reductions in driving and air pollution.
Hedonic price modeling of 45,000 home sales within two miles of train stations shows that three improvements to the NJ TRANSIT rail system – Midtown Direct Service on the Morris & Essex Line, the Montclair Connection for the Montclair-Boonton Line and Secaucus Junction for the Pascack Valley and Main/ Bergen/Port Jervis Lines – increased the value of nearby homes by an average of homes near train stations significantly gained in value after midtown direct, montclair connection and Secaucus Junction – an average of $23,000 per home, with the highest gains closest to the stations nearly $23,000 per home (in 2009 dollars). Homes within walking distance of train stations gained the most value – up to $34,000. Value appreciations were less significant farther from stations.
Cumulatively, these three projects boosted home values by $11 billion. This represents $250 million a year in new property tax revenue for municipalities.
- A detailed comparison of the trip time reductions provided by these three projects with the trip time reductions expected from ARC reveals that ARC could raise home values by an average of $19,000 per home, and up to $29,000 for homes within one-half mile of stations.
- Cumulatively, ARC could boost home values by $18 billion, and generate $375 million a year in new property tax revenue for municipalities. This is significant as growing tax bases relieve pressure for municipalities to increase tax rates.
- The number of residents west of the Hudson River with a train commute to Midtown of under 50 minutes will double after ARC, thanks to faster commuting times. The number of people within 70 minutes of Midtown will increase by 25%. This extraordinary improvement in access will have significant positive economic impacts for families and municipalities across New Jersey and New York, as wages are 60% higher in Manhattan than west of the Hudson.
- The economic development and quality-of-life-improving potential of better transit can best be harnessed by building new, transit-oriented, mixed-use, economically diverse develop•ment around train stations. NJ TRANSIT, Metro-North, municipalities, and the state of New York and New Jersey should work together to optimize ARC’s benefits for the most residents possible.