Survey Reveals Light Rail Impact on Denver House Prices

We Compared House Value Appreciation in 2 groups Over 5 Year Period

Watson Buys employed a 3rd party company to perform the research and survey.
The houses were divided into 2 categories.

The first category was houses that were close to a station. Specifically, they were located within 4 blocks of a light-rail train station. The second category was the rest. That is houses that were further away than 4 blocks to a light rail stop.

The next step was to look at the average price of homes sold over the past 6 months in the 2 groups. The final step was to look at the average price of homes sold in the 2 groups over a 6 month period in 2015.

Shall we give you the results?

Introduction to why we conducted this research.

We are a real estate investment company headquartered in Denver, Colorado. As such we like to understand the impact different amenities have on the property we are looking to purchase.

Let's dive in, shall we?

Average Price of Home Sold in Denver

We first needed to understand what appreciation was over the past 5 years in Denver. The average price of homes sold in 2015 was $408,357. The average price of houses sold in Denver was $615,766. This is an appreciation of 50.79% over the 5 years. Now let’s compare the average appreciation to the 2 groups.

So Does Proximity to Light Rail Increase Property Value?

Denver houses within 4 blocks of a light rail station appreciated 56.96%

In 2015 houses that were within 4 blocks of a light rail station in Denver had an average sales price of $387,698.
By the end of 2020, the same group had an average sold price of $608,544.
Over the 5 year period that was looked at it was found houses that are located within 4 blocks of a light rail station in Denver increased 56.96%

Denver houses outside 4 blocks of a light rail station appreciated 51.53%

The average price of houses that were outside 4 blocks of a light rail station in Denver that sold in 2015 was calculated for us as $411,698.
In 2020 house prices in this group also increased. By the end of 2020, the group of homes that were more than 4 blocks away from a light rail station had an average sold price of $623,827.
Over the 5 year period that was looked at it was found houses that are located within 4 blocks of a light rail station in Denver increased 51.53%

Houses in Denver Within 4 Blocks of a Station Increased at a Higher Rate

Houses that are located within 4 blocks of a light rail station appreciated by 56.96%.
This is higher than houses outside the 4 block radius which appreciated over the same period at 51.53%
So what does this mean?
According to the statistical analysis provided to us, this is NOT a significant difference.
There are many studies that show similar and different results. Take each set of data with a grain of salt.

Further thoughts on house proximity to light rail in Denver.

I sincerely hoped to see a statistically measurable increase in value when a house was closer to a train station. To me, it made logistical sense.
However, from our study, I cannot draw this conclusion.
In a study focusing on Denver G Line only, they announced an increase of 102% since the announcement of the project. This might suggest more significant appreciation however other variables were also involved.

Light rail must add benefit to individuals before house value rises

For light rail to add value to the property it must first add value to the residents of the city.
Historically Denver has very low ridership, as measured by a percentage of the city when compared to other cities.
It was quoted less than 5% of Denver's residents use public transit. Light rail only being a portion of that.
The reason experts believe that riders are low when compared is that, despite what Denver residents want to believe, traffic in the Mile High City is not that bad.
"It is very common for people in Chicago or New York to travel less than 10 miles in more than an hour, each day they drive to work," said Trevor of a Transit Environmental Advocacy Group. He continued "A typical 10-mile drive, even in the worst that Denver has to offer is lower than this with the average drive time being less than half."
Therefore it would seem the light rail in Denver doesn't provide the value of decreased travel time, CURRENTLY.
You may have noticed I used the word currently at the end of the last paragraph.
Why do you say?
The population of Colorado is expected to increase by roughly 30% over the next 20 years.
If this happens we would see another 2 million people living in Colorado.
Trevor suggested that the lion share of these people will move to the front range and the added pressure could certainly tip the balance in the favor of living closer to a train station.
"As you know there are many factors to account for. Only a short time ago light rail was proving to be more popular only to be blown down by a global pandemic. Population growth is a sure way to increase traffic congestion which will ultimately result in more value perceived in riding light rail.
There are also more plans to add more light rail to Denver. This could also change current ridership numbers.

Denver residents not ready to ride the rail... yet

In a follow-up survey, we asked Denver residents if they were willing to ride light rail currently.
Of those who described themselves as regular users prior to COVID 19, only 17% said they are willing to ride at the moment.
Obviously, this is a headwind that light rail will need to power into for it to prove valuable to Denver residents.
Some surveyed suggested as the vaccine is rolled out and the effects felt they were most likely to return to light rail.
However, many also hoped they could continue to work from home.
Some residents made this comment (or similar) about resale and light rail access. “I believe if my property is near light rail it is an added feature. Maybe it won't sell for more but I believe i could sell my house fast in Denver with this access.”

Final Thoughts On How Light Rail Impacts House Prices in Denver

Survey Reveals Light Rail and COVID-19 Impact Final thoughts.
Currently, we were unable to show that houses near a light rail station in Denver appreciated more than houses that were further away.
Other cities that have been studied have shown a positive impact on house prices. The statistical significance I am unsure of.
Boston, Atlanta, San Diego, San Francisco, and Portland all measured greater gains in property value when closer to a railway station. They showed that if a house is within a quarter of a mile of a station then the value increased more.
Conversely, Miami, San Jose, and Sacramento did not show any house value increase as light rail access improved.
Trevor argues that this further demonstrates that light rail access in cities with a great traffic problem is more likely to have a positive impact on property value.

Thanks to everybody who contributed to this at Watson Buys for putting together this article.