Investing in real estate requires a keen understanding of various factors that contribute to property value and desirability. One such critical factor is the availability and efficiency of public transportation. This article series aims to provide insights into public transport usage and service levels across key urbanized areas in the United States, serving as a valuable resource for real estate investors and developers.
In previous articles (here and here), we analyzed public transport demand and supply, and the efficiency of public transportation in U.S. cities.
This article delves into the relationship between these public transportation indicators and housing prices and rents. Specifically, it analyzes how public transport usage (Unlinked Passenger Trips, UPT) and service supply (Vehicle Revenue Miles, VRM) correlate with housing prices and rents across different types of housing, using data from Zillow, covering the period from April 2023 to March 2024.
As shown in Figure 1, UPT per Capita and VRM per Capita have a higher correlation with housing prices and rents than total UPT and total VRM, which can be influenced by city size and population. Therefore, we focus on per capita metrics in our analysis.
The analysis reveals that VRM per Capita has a significantly higher correlation with housing prices and rents compared to UPT per Capita. For housing prices, single-family (SF) homes show a stronger correlation with public transport metrics compared to multi-family (MF) homes. In the case of rents, MF rents have a higher correlation with public transport metrics than SF rents. Interestingly, for MF rents, UPT per Capita and VRM per Capita show similar levels of correlation, whereas for SF rents, VRM per Capita has a notably higher correlation than UPT per Capita, similar to the case with the prices of SF and MF homes.
The analysis reveals a significant correlation between housing prices and rents with public transportation service metrics, with VRM per Capita being the more dominant variable. While there are some variations based on the type of occupancy (rent vs. buying) and housing type (SF vs. MF), overall, VRM per Capita consistently shows a stronger association with housing metrics.
These insights suggest that real estate developers and investors should consider public transportation service supply, particularly VRM per Capita, as a critical factor in their decision-making process. Integrating this information can lead to more informed investment choices, potentially enhancing property value and desirability.
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