The Supply of Housing Near Transit

HARLEM - Convent Avenue Brownstones

NYC Brownstones, photo by flickr user Professor Bop

Last week I started looking for answers to some questions I had about transit oriented development. Today, I want to see if I can answer the question “are we doing enough to keep supply in pace with this increased demand?”

According to this report, “Hidden in Plain Sight; Capturing American’s Demand for Housing Near Transit”, sponsored by the Federal Transit Administration, Fannie Mae and the Surdna foundation, in 2004 there were just 6.1 million households currently residing within a half-mile of a fixed-guideway transit station in the US. By 2025, the report estimates there will be at demand for at least 14.6 million households, which represents a quarter of new households expected. According to the authors, there could be even more if growth rates increase or gasoline prices rise more than expected.

This is good news, right? Maybe not. According to the study, there were 3,341 fixed-guideway transit system stations in the US in 2004, but the number was only expected to grow by 630 stations by 2025. That number may be a bit off today- a number of transit systems are in various stages of construction across the country right now. Still it’s certainly correct in order of magnitude if not precise. My next post will highlight some of what could happen if the gap is not closed, but today I’d like to talk about ways of doing just that.

Hong Kong has one of the better ways of turning the demand for housing near stations into, well, new stations and new housing. The railway operator there, the MTR Corporation LTD, is a for-profit enterprise majority-owned by the government of Hong Kong – a common arrangement for transit operators in Asia. MTR is also a major property developer, and uses the money from the property development to fund new subway line construction, where it starts the process again with new housing. This arrangement would never work here: transit systems can’t really run the kind of profits necessary to make them private enterprises and government agencies can’t really become property developers (or can they?). Still, it’s not impossible to imagine some sort of public-private partnership emerging to build a transit line.

Take Dallas for example. Dallas Area Rapid Transit (DART) has opened 72 miles of light rail track in the past 15 years, and had opened 43 miles of track by the time this 2007 on the fiscal impacts of TOD was written. The study found that in the period from from 1999 to 2007, $4.9 billion worth of transit oriented development was built along DART lines, with $4.26 billion worth of that attributable to DART. Now, 1999 to 2007 coincides pretty closely with a massive real estate bubble, but it’s worth noting that TOD construction has continued there during the recession. The study finds that this resulted in an annual tax revenue capture for local governments of $127 million for 2007. I’m sure this number is lower now due to the recession, but it isn’t inconceivable to imagine the system paying back its construction costs in some way over time.

TriMet: Portland Streetcar

Go By Streetcar, photo from TriMet's flickr

Portland’s streetcar makes an even stronger case. A 2008 study prepared by the Portland Office of Transportation and Portland Streetcar, Inc. indicates that $3.5 billion in new construction was invested within two blocks of the streetcar from 1997 to 2008. Yes, this also coincides with the real estate bubble, but that’s not really the point. The streetcar cost just $103 million to construct – a 34:1 ration of development to construction cost – suggesting it could have been possible to pay for the entire construction with fees on real estate in the area immediately adjacent to the project. To be fair, a “Local Investment District” contribution from property owners did finance about 19% of the project’s cost, but capturing 3% of the construction value could have paid for the entire thing.

The SLU streetcar got half its funding from area property own, and it took just three years from planning to completion. It’s already attracted a lot of development near it, though I’m not sure how much development in SLU could be directly, quantifiably attached to the project. I imagine we’re going to see quite a bit of construction in the First Hill Streetcar area, and it might be worth capturing that and other center-city demand to help built out the network.

Housing bubble-driven speculation or not, it does seem possible to capture some of the demand for transit-oriented housing as cash to fuel the construction of new fixed-guideway transit lines. Even though there’s decades of literature on this subject, I’m sure it’d take some time and some tweaking to get the formulas correct, and it would probably work a lot better for cheaper streetcar projects than for more expensive light rail projects. Still, it’s worth having a go at it and not just for the infrastucture. In my next post, I’m going to look at what happens when the demand for transit-friendly housing exceeds supply, and the problems that arise therefrom.




Comments

  1. It seems that Seattle and its real estate developers have already invested billions of their money and the taxpayers money on the thought that “transit oriented housing” is something that people want and are willing to pay for. If it hasn’t happened yet, asking for more money isn’t going to make it happen, in the same way that two (count ‘em two) billion dollar sports stadiums did not transform Sodo from a bunch low rise light industrial sites into a yuppie paradise.

    • Billions!? Yeah, sure.

    • What a spectacularly foolish comment. I guess I must have just been high on crack when I saw those new multistory apartments on MLK.

      As for SODO, the stadia are obstacles to walkability and TOD, not assets. (Which isn’t to say they shouldn’t exist.) Last I heard, the city was trying to discourage residential development in SODO so it stays light-industrial.

      • Bailo’s response is likely to be “You weren’t high if you saw/will see them empty and/or dirt-cheap because the developers overbuilt to meet nonexistent demand.”

        The question with the sports stadiums more revolves around businesses on the north side, facing Pioneer Square, where most of the fans are coming from.

      • That’s a level of analysis I’ve never seen in one of J.B.’s posts.

      • It’s a talking point I have seen almost word-for-word in SOME commenter’s posts (if not Bailo, maybe Bernie?)

    • Andrew Smith says:

      If it hasn’t happened yet

      Did you read the post? It did happen…

    • Stop lying. The two stadiums combined barely reached 1 billion, let alone costing 1 billion each…

      And no one ever promised housing development would grow in the wake of the stadiums being built.

  2. A few points:

    Much of the “L” lines in Chicago and New York were built by private sector to attract new tenants to their “green field” developments before the era or highways. This concept is nothing new to the United States.

    The amount of development associated with the Portland Streetcar was likely to happen regardless if there was a streetcar there or not.

    A government sponsored agency that built TOD to fund transit lines would be susceptible to political pressures to hamper the success of a TOD. First there is the desire for affordable housing which makes the project less profitable. Next local residents would have an easier time fighting density. Lastly, one bad decision from the agency and the conservatives would demand the end of the venture immediately.

    • joshuadf says:

      The development “was likely to happen regardless if there was a streetcar there or not” argument is a tricky one, in SLU or Portland or Dallas or wherever. Would Vulcan have built as fast or as high in SLU? Would Amazon.com have been attracted? No one really knows the answer, but I think it’s definitely debatable. I sure don’t believe that one bus running every half-hour on Westlake (MT 17) would have been acceptable to attracting Amazon to Vulcan buildings, for example. Maybe they could have done it cheaper via my personally preferred option which would be new high-quality rapid ETB line, but that doesn’t have the real estate cache. I just ran across an old email from my first meeting in SLU, at SBRI in May 2006 before the streetcar and remember it was a huge pain to get there! The Metro Trip Planner helpfully instructed me to get off at Harrison and Aurora…

      By the way here’s a long very post about Dallas’ streetcar proto-plan:
      http://www.carfreeinbigd.com/2010/02/one-if-by-car-two-if-by-streetcar.html

      It is important to remember that no form of transportation on the history of the planet was ever “profitable” in and of itself. Even for me to ride a bike to the new bowling alley bar in Deep Ellum this Summer requires 1) cost to buy the bike, and 2) energy, ie calories. I have to eat a powerbar to expend the energy to get to my destination. Yet, it seems free, just like it does to hop on the highway and drive to Walmart. The true costs have been “unbundled,” so the average person has no idea how much they’ve been screwed over by the automobile monoculture.

    • Andrew Smith says:

      The amount of development associated with the Portland Streetcar was likely to happen regardless if there was a streetcar there or not.

      Did you read link? They calculated 75% of the added development was from the streetcar.

  3. Benjamin C says:

    Denver is currently building out 3 of its “light rail” (high frequency electric commuter trains) lines, including the Denver Union Station to Airport line, with a public-private partnership. Unfortunately, development isn’t a major part of this partnership. Denver has had some difficulty filling out its TOD portfolio due, in part, to the timing of the real estate bubble. Existing TOD did have stable values during the crunch though, and if the national demand for housing near transit comes to fruition, I’d expect development to pick up rapidly.

  4. (1) Does electric trolleybus count as “fixed guideway”? (Not so fixed I guess if it can be so easily shut down and dismantled as Metro is threatening.)

    (2) Many Seattle neighborhoods grew up around streetcar lines and these are still the most “walkable” neighborhoods in the city. I live in one (top of Capitol Hill) and although I own a car I have not driven it yet this year – no need. The streetcars have been replaced by trolleybuses but when I see the #10 trolley humming down 15th E I thank its ancestor for my ped-friendly neighborhood.

    • #1: Which isn’t much better than the 30′s streetcars, but point taken.

      • Anandakos says:

        Morgan,

        ETB’s are MUCH better than streetcars in mixed traffic. They can avoid an illegally parked or stalled vehicle, they can pass each other if the leading bus pulls its poles, and they are cheaper to build and operate.

        Now when streetcars gain reserved right of way in their trunk run (like SF’s and Boston’s) they become much more efficient. It’s OK to have them share with cars in the outer portion of their runs so long as they have a good jog to the CBD in which they can prevail over the rubber tired traffic.

        Lacking that ETB’s are a better choice.

      • I was responding to “(Not so fixed I guess if it can be so easily shut down and dismantled as Metro is threatening.)”

      • Andrew Smith says:

        I don’t mean to re-hash old arguments, but most people believe streetcars are better at spuring development because they are percieved as permanent and better at gaining ridership because people see them as a superior service to buses.

        This basically summarises the arguments:

        Most transportation planners believe bus transit routes do not attract significant land development investments. This is true in part because bus routes are perceived as impermanent services that could change to other locations and in part because of our cultural history, which has led to an association between bus transit and low-income and disadvantaged populations.

        the first point has a commonsense truth to it if you consider the frequency with which Metro and Sound Transit move, combine, reduce service to and elimanate routes.

        This sort of thinking summarises the second point (which I don’t agree with at all, btw).

        There’s also a capacity issue.

        Ben wrote a great summary a while back.

    • Andrew Smith says:

      1) Yes, actually (emphasis added)

      There are 27 metropolitan regions that are currently operating some form of fixed-route transit, including heavy and light rail, commuter rail, streetcars and trolley buses, bus rapid transit, and cable cars.

      • Then my next question is, what counts as a station? There are hundreds of ETB stops in Seattle alone, but I’m guessing those don’t count, even if they have a shelter. :)

      • Andrew Smith says:

        It’s a good question, and if the answer is “all stops” then it seems that number is nonsense, but there’s this:

        Using data from the Federal Transit Administration (FTA) and other sources, we have developed a database of the nation’s heavy rail, light rail, bus rapid transit, and commuter rail systems and the 3,341 stations served by those systems, as well as selected Amtrak stations, in 27 metropolitan regions that have and are expanding fixed-route transit systems, as well as 15 metro regions that are developing fixed-route systems.

        There’s data in a table near the very end that says 45 AMTRAK stops, 1,223 Commuter rail stops, 420 light rail, 1,650 BRT for 3338 total (I don’t know where the other three come from). Commuter includes heavy rail like the NYC subway and BART in their measurements.

      • Commuter includes heavy rail like the NYC subway and BART in their measurements.

        Forgive me for being skeptical of a document that thinks the NYC subway has more in common with Sounder than Link…

      • Andrew Smith says:

        Did you read the document? It doesn’t think that at all. Its just counting, and when it’s counting it counted those in buckets that way.

  5. Belleviewer says:

    Like SLU, and once done, how much East Side development will we be able to attribute to East Link, or how much would have happened anyway with the Bellevue City Council’s re-development and rezoning plans for these areas, or other government funded housing initiatives already in work.

    Let’s analyze the opportunity for TOD with East Link. We continually talk about TOD around the proposed stations – but it always seems to have minimal effect (like, 56 people in the walk shed) compared to other TOD opportunities in the region.

    It appears that each station (in either Bellevue’s Plan or ST’s Plan) is already developed or developing to meet the increased housing demand prior to light rail (Bellevue, Redmond, Overlake); and/or is limited on further development (South Bellevue P&R, Downtown Business District or Hospital). Only the Bel-Red Corridor stations can work hand in hand with TOD – and based on their location – I question whether Billions in Light Rail infrastructure is necessary to spur this development. If we only need to provide mass transit to, from and AROUND these developing communities – are there other options?

    • Andrew Smith says:

      Like SLU, and once done, how much East Side development will we be able to attribute to East Link, or how much would have happened anyway with the Bellevue City Council’s re-development and rezoning plans for these areas, or other government funded housing initiatives already in work.

      Kind of a moot-point. Bellevue wouldn’t consider rezoning those areas without the light-rail; they have to take transportation into account, and those people need to get in and out of there.

      Oh, and it’s not billions for light-rail through bel-red.

      • Belleviewer says:

        Maybe not Billions through Bel-red – but Billions jsut to get there.

        If you are saying Bellevue wouldn’t rezone Bel-red without a light rail plan – i tend to agree. But with the failure of light industrial in that area – something had to happen. The other areas are already done, and either have been or aren’t being rezoned.

        But if all we are talking about is the development of Bel-Red – and transit to support — does it take East Link?

      • Andrew Smith says:

        But if all we are talking about is the development of Bel-Red – and transit to support — does it take East Link?

        I don’t think that’s a the right question. Here’s a better one:

        If we can use all the pent-up demand in Bel-Red to help pay for East Link, shouldn’t we?

        You can take East link to mean the DT Bellevue Tunnel, another Tunnel, other East Link elsewhere, whatever.

      • Jason Mitchell says:

        “But if all we are talking about is the development of Bel-Red – and transit to support — does it take East Link?”

        Doesn’t really matter.

      • If we can use all the pent-up demand in Bel-Red

        What pent-up demand? There is only one proposed development, the Wright Runstad Spring district and it’s “Projected Start Date: To be determined”. If they do break ground in the next 5 years (unlikely give the on hold status of DT developments like The Bellevue) only a small portion of the proposed 36 acre development would be phased in by the time East Link opens. The only pent-up demand seems to be for luxury auto dealerships and auto related services. With the exception of the DT core Bellevue’s growth since 1980 has largely been by annexation. The population boom was really in the 1960s. Bellevue’s 2nd HS, Sammamish was opened in ’59. Newport ’64, Interlake in ’67. Since then the district had to reorganize from a 3 year High School and Jr. High model to 4 year High School Middle School model to keep all four open. The total number of schools peaked in 1977.

      • Andrew Smith says:

        “Pent-up” could have been a poor choice of words.

        I’m not sure # of schools is a perfect proxy for population. Seattle’s population is larger now (608K in the census) than it was in 1960 (557K in the census), but the highschool population is so much less that three high schools have closed (Queen Anne, Lincoln, and Grompers)

      • To be sure Bellevue’s population has grown in addition to just that gained by annexation but the transformational change was in the ’60s following the opening of the 520 bridge. The transformational change since 1980 has been the DT Bellevue skyline and what that’s created is a pattern of people commuting to Bellevue rather than just from Bellevue.

    • Mike Orr says:

      Having a 10-minute train across Bellevue and from there to Seattle and Redmond is more important to me than whether the apartments/condos in the walksheds are “TOD enough”.

      • Matt the Engineer says:

        The future people living in those apartments might disagree.

      • Mike Orr says:

        They might, but they’re 100 or 200 people compared to the thousands who will use the station or who indirectly benefit by having the station available. New TOD construction is not the only reason to build light rail, and it’s not necessarily the main factor either. And if the new units are so expensive that only a few people can afford them, then the system will have failed to solve the housing-near-transit issue for the majority of the population.

        I just think some people are getting too specific about what kind of development is acceptable. The Meydenbauer Avalon and the buildings near the library are within walking distance of BTC so that’s good in my book, but they’re not TOD because they’re not adjacent to the station. The Surrey Downs park extension is one block wide and people can easily walk across it from the houses, but that’s not TOD either. If Bel-Red builds anything that resembles apartments and condos within walking distance of the station, I’ll be happy, even if the doors are on the wrong side of the building or the street is too wide. (What would be bad is if they built only townhouses, which would severely limit the number of people who could live near the station. Or if they built enormous parking lots between the station and business entrances.) We need some stations with new TOD potential but not all stations have to be like that.

  6. Wow. The dude in the second house from the right DOES NOT like to be hot.

    • NYC/SEA hopper says:

      NYC in August is miserably hot AND humid…

    • Ben Allen says:

      Most likely each floor is a separate unit… so it’s not one dude who hates being hot, it’s at least three.

  7. I can validate the housing near good transit is EXPENSIVE. In my case (which is a bit extreme), in order to live one block from a station I pay 1.5x the price I would for an equal apartment 10 blocks away.

    The demand is there, and it’s undeniable. All you have to do is take a look at housingmaps.com.

    The disparity seems highest in good neighborhoods, but even in the ghetto there’s usually a small bump in rents that are near a station.

    Even if the majority want McMansions a zillion miles off in the exurbs (which is becoming debatable), they have a vast glut to choose from. Mixed-used transit-friendly neighborhoods, however, didn’t see much drop in the recession, and in my neighborhood’s case rents actually went *up* through it.

    I don’t understand so many conservatives fail to see that there is a huge underserved market, with tons of money to be made. Demand blatantly outstrips supply. The end result is the landowners lucky or smart enough to already have property near stations are making money hand over first.

    • Conservatives can’t see the forest for the trees labelled “war on cars”, “cut government at all costs”, and “what global warming?”.

      In other words, they’re too committed to their talking points to let a little thing called reality get in the way.

      Also, most of them don’t live in places with good transit – it may be obvious to a New Yorker or a Seattlite, maybe not to someone from Middle of Nowheresburg.

      • Conservatives also seem to forget that the biggest “social engineering” project in the last 70 years has been the Eisenhower Interstate Highway System. Even before that, though, if you read up on the first national paved highway system, the US highways, they were strenuously opposed by rural communities.

        This seems absurd now, as rural and interstate roads (subsidized by people in the cities) are the sine qua non of rural life. The reason given was that farmers and other rural people used horses and carts for which minimally signed, unpaved roads were adequate, and saw no need for automobiles and bicycles, whose owners they saw as intruders from the city.

        In some respects then, everything has changed, but in others, everything is still the same. City folk are still dragging everyone else along…

      • Here’s an interesting link to the history of the US Highway system. Unless you’re talking about the Amish the farmers were quick to embrace tractors and trucks to replace draft horses and manual labor. If they didn’t they didn’t stay in business long. A Ford was for many in cities a toy but in rural America it was a tool.

      • As we all know dense “transit” has made all New Yorkers abandon the private automobile and transformed its avenues into green strips which are eco friendly and dominated nearly 100 percent by bicycles, as this photo shows:

        http://www.panoramio.com/photo/505792

      • I think you meant to link to this, John.

        http://www.streetsblog.org/2009/02/26/the-great-pedestrian-way/

      • Cabs =/= private automobiles.

    • Pedestrianized Broadway is truly amazing.

      I remember when Pine between 4th and 5th was blocked to traffic for a brief, pleasant few weeks.

      And what’s holding back pedestrianizing Pike Place Market?

      • for a brief, pleasant few weeks

        Wasn’t that several years. I was really surprised Seattle took a Kemperish stance on this after the closure had already been implemented.

  8. it does seem possible to capture………

    you got something right

  9. the demand for transit-oriented housing ……….

    a bus nearby?? do they come without garages?? shouldnt you be discussing the demand for transit near houses??

    and the supply of transit near houses??

  10. but the number was only expected to grow by 630 stations by 2025. ???

    is that low?? how many times must a train stop before it just creeps along.

    if more live on top of one another do yo need a lot more stations??

  11. wouldnt develpment orientd transit make more sense in many areas?

  12. “Hidden in Plain Sight; Capturing American’s Demand for Housing Near Transit”,

    what does that mean?? why not just add transit to areas it is demanded in.

  13. in 2004 there were just 6.1 million households currently residing within a half-mile of a fixed-guideway transit station in the US. By 2025, the report estimates there will be at demand for at least 14.6 million households, ….

    were the houses there already and the rail came in later?? was there much of a choice on where to put the rail??

  14. why focus on fixed guideway (rails???)??

  15. “I’m going to look at what happens when the demand for transit-friendly housing exceeds supply, and the problems that arise therefrom.”

    can that even happen?? do you and can you determine what is transit friendly??

    if its transit unfriendly as you claim cant you just add transit?? a bus for instance.

    if a 10 dolalr an hour person cant afford a 550k, 600 sq ft condo on a transit line is the supply exceeded??

  16. with housing cant supply increase in an area when say a lot of layoffs occurand people move and in another area increase because of better economic conditions??

    lots of empty houses here because they are vacated…few empty houses here (but being built rapidly) becuse of favorable economic conditions.

    are you really looking at housing supply in an accurate manner?? also is this content just contrived to be useless and dishonest??

  17. My lease is up in May. Looking for a place near Link. Any suggestions?

    • Mike Orr says:

      There are lots of apartment buildings on MLK, although many are run-down looking and may be sketchy, and there aren’t many “Vacancy” signs up. There are plenty more choices in Rainier between Columbia City and Rainier Beach, in similar condition but perhaps with more vacancies. The building on Rainier & Myrtle has large units, parking and balconies but it may be sketchy too. I think the (high-end) Othello Station building will open this year, and the little village there has the Safeway, a laundromat, and some restaurants and stuff. Henderson Street (Rainier Beach station) also has several buildings with a mixed low-income and middle-income tenancy. Other possibilities include the houses on Beacon Hill, and Uwajimaya Village and environs in the Intl Dist.

      I considered moving to Rainier Valley last year but it was just too far from my job in northeast Seattle until Brooklyn station opens, and RV just doesn’t have enough walkable amenities yet for me (e.g., natural foods store). I ultimately decided to hunker down on southwest Capitol Hill (which has the most frequent routes, nearby express buses, and Westlake station) — until North Link opens and I’d feel comfortable living anywhere on the line.

Sign in or create an account to save your credentials and make commenting faster.



You may want to read our comment policy.