The Effect of Proximity to Urban Rail on Housing Prices in Ottawa

Increasingly, urban rail transit (URT) is seen as a desirable solution for transportation challenges faced by both urban planners and residents of suburban areas alike. The availability and ease of access to URT, in turn, may result in distortions in local real estate markets. The conventional wisdom, in fact, suggests that construction of urban rail lines serves as a magnet for new housing development and, in turn, can lead to increases in property values in proximity to URT stations. Existing studies have, in good measure, confirmed this belief, but largely on the basis of global area studies that can often mask locally differentiating factors affecting housing prices. Using data from the City of Ottawa, this study seeks to move beyond such analyses by using spatial regression and mapping techniques that reveal that the relationship between URT stations and housing prices is far more complex than is commonly believed. The study demonstrates that while at the macro-level housing prices do vary positively with proximity to URT stations, the relationship is spatially dependent and may be affected by factors unique to specific locales. Introduction Urban rail transit1 (URT) is an increasingly important feature in major cities insofar as it provides effective transportation to work, leisure activities, and shopping for citizens, particularly in suburban areas (Hess and Almeida 2007). There are also 1 Urban rail transit is any form of “rail [transit] in an urban area, including both heavy and light rail, which may be underground, at level or elevated” (Flyvbjerg 2007, 12). Journal of Public Transportation, Vol. 15, No. 4, 2012 44 considerable cost savings accruing to transit users due to the reduced need for personal vehicles, as well as the satisfaction of knowing that one has contributed to positive environmental outcomes. As a consequence, there is often a desire to reside in proximity to URT stations, which provide easy access to the central business district (CBD) and other distant parts of the city. To date, a number of studies have demonstrated a relationship between proximity to URT and property values (see, for example, Bowes and Ihlanfeldt 2001; Chen et al. 1998; Hess and Almeida 2007; Nelson and McCleskey 1990; Ryan 1999). For the most part, these have confirmed a conventional wisdom that suggests that residing near URT stations can have a positive impact on property values. In a limited number of studies, however, the reverse has been shown; that is, living too close to URT lines may actually depress housing prices under certain circumstances, owing to inconveniences associated with construction and or operation of suburban trains (see, for example, Landis et al. 1995; Nelson 1992; Ryan 2005). Using advanced spatial regression techniques in combination with detailed mapping and employing a broad range of data from multiple sources, this study seeks to bring clarity to this debate by examining the effect of proximity to URT stations on property values in the city of Ottawa, Canada. In accord with virtually all studies on the topic to date, the study reveals URT location to, indeed, be a sound predictor of housing prices. It is also one, however, that is spatially defined and operates in a somewhat more complex fashion than the existing literature would suggest. Specifically, the research demonstrates that both positive and negative impacts of proximity to URT stations on housing prices are in evidence within the same sampling frame, largely dependent upon spatial location along URT lines. Current Research on URT Location and Housing Prices For this study, 22 analyses conducted between 1973 and 2010 focusing on the relationship between URT location and housing prices were examined. The vast majority of studies were conducted in the United States, some involving multiple cities. About one-quarter were undertaken in other countries, primarily in Asia, with one each in Europe and Latin America. Only two academic studies examining the relationship between the two variables in the Canadian context—both conducted prior to 1985—were discovered, both focusing on the city of Toronto. Overall, this body of research has presented somewhat divergent tendencies. For the most part, studies have shown a negative relationship between housing prices and distance to the location of URT stations. In other words, housing prices tend to