An Evaluation Of Property Values In New Jersey Transit Villages
The New Jersey Association of REALTORS® (NJAR®) Governmental Research Foundation (GRF) has released a report conducted by the Bloustein School's Alan M. Voorhees Transportation Center revealing an association between designated Transit Village areas and higher residential property values. The study, An Evaluation of Property Values in New Jersey Transit Villages, is available online.
According to GRF President Bill Hanley, “The study was undertaken to determine whether the Transit Village Initiative, and its corresponding redevelopment, leads to increased property values for home and business owners within the designated area.”
Researchers performed an in-depth examination of six of the state’s 20 Transit Villages: Bound Brook (Somerset County), Belmar (Monmouth County), Burlington City (Burlington County), Journal Square in Jersey City (Hudson County), Metuchen (Middlesex County) and Pleasantville (Atlantic County). The various site analyses were conducted between January 2008 and June 2010. A graphical analysis was performed on all 20 Transit Villages, as well as a statistical analysis of almost every municipality in New Jersey.
The correlation between increased residential property values and the Transit Village designation was statistically small; however, property values in 13 of the 20 transit villages in New Jersey increased when compared to their respective regions. “The report could not show a cause-and-effect relationship between home values and the designation, but did confirm that other factors tying into the Transit Village designation had an effect on property values. In addition to transportation accessibility, other factors that affect home value include crime rates, school quality, population density, housing supply and property tax rates,” Hanley stated.
In the six transit village site visits, new development included a mix of retail and residential uses, with the exception of Bound Brook, where there was virtually no new commercial construction and Journal Square, where there was a large amount of new office development. The study was unable to determine whether retail and industrial rental rates were affected either way by Transit Village designations. Hanley added, “The study also found that municipal involvement also has a connection to property values. The report revealed that municipalities that are more pro-active in their planning and are more equipped to complete redevelopment projects are more likely to reflect increased property values.”
According to Voorhees Transportation Center Director Robert Noland, “We conducted detailed statistical modeling that included almost every municipality in the state. We were surprised to find that in some models we found a small effect on home prices associated with the Transit Village designation. Our further investigation of six specific transit village municipalities suggests that it is not the Transit Village designation that necessarily affects home prices, but a commitment to more transit-friendly development in those municipalities. The support of the state from the Transit Village Initiative certainly is helpful, and it is worthwhile to reward those municipalities who desire to change how they have developed in the past. Our analysis of commercial real estate prices was hampered by poor data and thus we have no conclusions on how they were affected by the Transit Village Initiative.” Noland led the research team of Michael L. Lahr, associate research professor at the Bloustein School's Center for Urban Policy Research, and Stephanie DiPetrillo, project manager of the Voorhees Transportation Center.
“Therefore we can conclude that it is not the designation itself that led to how property values were affected, but other factors in the respective communities, such as municipal commitment to redevelopment,” Hanley concluded.
The Transit Village Initiative was created as a “smart growth” strategy designed to foster transportation-efficient community redevelopment and revitalization around transit facilities. The New Jersey Department of Transportation (NJDOT) administers the initiative in partnership with NJ Transit. In order for a municipality to receive a Transit Village designation, it must have the presence of or potential for: affordable housing; bicycle and pedestrian improvements; public amenities; a local management organization; and community events.