Estimating the Effect of Transit on Residential Property Values: The Case of the Portland MAX System

Using a hedonic price model with demographic, spatial, and house characteristic data, this study finds significant property value premiums associated with access to rail mass transit in the Portland, Oregon. Incremental changes to a "benchmark" model - similar to many used in the literature - lead to the adoption of a more appropriate "target" model that incorporates several innovations. This paper finds that assessment data is more appropriate and consistent than sale price data; that the use of a continuous measurement of the distance to transit is more powerful than a binary measure; and that the consideration of "community amenities" - such as schools or parks -in the model specification improves the resulting estimates. The target model finds significantly higher transit access premiums than prior models, suggesting that municipalities may see greater property tax benefits from transit construction than previously estimated.