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Gentrification Trends in New Transit-Oriented Communities: Evidence from 14 Cities That Expanded and Built Rail Transit Systems

Over 25 billion dollars were spent between 1970 and 2000 in 14 major cities in the United States on the construction of new rail transit lines. This massive investment in rail transit construction and expansion allows me to study the consequences of local public goods improvements for communities nearby new stations. This article uses a 14-city census tract–level panel data set covering the years 1970 to 2000 to document significant heterogeneity in the effects of rail transit expansions across the 14 cities. Communities receiving increased access to new “Walk and Ride” stations experience greater gentrification than communities that are now close to new “Park and Ride” stations.

Introduction

Over 25 billion dollars were spent between 1970 and 2000 in many major cities in the United States on the construction of new rail transit lines. Billions more have been spent on maintaining and improving existing rail transit lines. While the supply of rail transit has increased, the fraction of metropolitan area workers commuting using public transit has declined from 12% in 1970 to 6% in 2000 (Baum-Snow and Kahn 2005).

Rising incomes and suburbanization of jobs and people explain a large fraction of this decline (Glaeser and Kahn 2004). In 1990 in Boston, 36 percent of workers who lived and worked in the center city commuted on public transit, compared to 5 percent of workers who lived and worked in the suburbs.

Proponents of rail transit investment argue that this transit mode promotes environmental sustainability and helps to strengthen center city economic viability. In this paper, I examine how community demographics evolve in new transport oriented communities. These are communities that are now close to new “Walk and Ride” stations and new “Park and Ride” stations. The supply of such locations has increased over time. This paper examines the consequences of transit expansions in fourteen of the sixteen major cities that expanded and built rail transit systems between 1970 and 2000.4 Across the fourteen major cities studied in this paper, 1,351 census tracts that were far from a rail transit station in 1970 are within one mile of a rail transit station in the year 2000.

This massive investment in rail transit construction and expansion allows me to study the consequences of local public goods improvements for communities nearby new stations. Using GIS software, I calculate each tract’s centroid’s distance to the closest rail transit station in each census year. Transit expansions reduce a census tract’s distance to the closest station. My census tract level panel data set covers fourteen major metropolitan areas over the years 1970 to 2000.

I first examine what observable attributes of communities predict being “treated” with increased access to rail transit. Such descriptive facts are useful for considering the political economy of who demands increased access to transit. In the second of the half of the empirical work, I examine how key community outcomes such as average home prices and the share of the community who are college graduates change in treated tracts versus in control tracts. My control group is census tracts in the same metropolitan area with similar observable attributes that have not experienced increased proximity to rail transit.

By documenting how large transportation infrastructure investments affect population sorting and home price capitalization within multiple cities, this paper builds on two real estate literatures. The first literature examines rail transit access capitalization into real estate prices; for a study of Chicago see McMillen and McDonald (2004) and for a study of London see Gibbons and Machin (2005). This paper also contributes to the literature estimating the demand for living in “new urban” communities (see Tu and Eppli 1999 and Coulson and Lahr 2005).

I document evidence of heterogeneous treatment effects both within cities and across cities. Within the same metropolitan area, communities treated with a new Walk and Ride station are more likely to gentrify than communities treated with a new Park and Ride station.5 Across the fourteen city sample, two cities that stand out in terms of overall gentrification effects are Boston and Washington D.C. Public transit expansions may not gentrify every community they reach. Glaeser, Kahn and Rappaport (2007) argue that public transit stations often act as a poverty magnet. The urban poor are less likely to own cars and thus place a greater value on rail access. In some metropolitan areas such as Atlanta and Los Angeles, for example, I find that the share of college graduates living in communities near new Park and Ride stations declines relative to trends in control tracts. This could partially explain why so many rich suburban communities (such as Georgetown in Washington D.C) fear the extension of public transit into their community (Altshuler and Luberoff 2003, Bowes and Ihlandfelt 2001).