Do Multifamily unit Rents Increase in Response to Light Rail in the Pre-service Period?

Abstract

The effects of transit investments on land and housing values are a longstanding topic of interest in part because the nature and timing of those effects are important for designing anti-displacement and land value capture strategies. For these reasons, we explore whether multifamily unit rents have increased in planned station areas before the Purple Line light rail project in Maryland is operational. We employ a difference-in-difference (DID) approach to explore this question and validate the DID results with a first difference approach. We find that rents for units located within one-half mile of anticipated stations did increase well before transit service is expected to begin, but only for units with two or more bedrooms. We suggest these results imply that anti-displacement and land value capture strategies are warranted and potentially viable, but to be effective they need to be adopted well before transit service begins. Further, our results suggest that in the case of the Purple Line in Maryland, such policies should focus on units located within one-half mile of proposed stations and concentrate on preserving affordable units with two or more bedrooms.