What Would Metro do to Property Values?

This probably belongs in the Counting-Eggs-Before-They-Hatch Department, but what would a Georgetown Metro stop do to property values?

As discussed (a lot) here, there is a renewed effort to bring one, or even two, Metro stops to Georgetown. WMATA wants to do it by 2040. Georgetown civic groups want it by 2028. Regardless of when it gets built, its construction will have a transformative impact on how people get to and from the neighborhood.

And normally when such a significant project is constructed, it results in a boost to the property values. A study by Booz Allen points supports this conclusion. The report concludes that “property value premiums due to increases in accessibility [due to the construction of rail transit] range between 3% and 40%.” The report cites several real world examples of this. For instance, the report states that the median home price for homes in Southern New Jersey that are close to the PATCO line experienced a 10% premium.

A closer corollary may be Miami. The report found that the construction of a subway impacted home prices at most only 5%. It found, however, that the impact was greatest in higher priced neighborhoods.

The Second Ave. subway currently under construction in New York may provide an even better model for the impact of a new line. GM could not find any formal studies on the impact on how the planning and construction has already impacted prices, and a final study won’t be possible until the line is finished, but real estate professionals predict a 10-20% increase.

Like Georgetown, the Upper East Side of Manhattan (the primary beneficiary of the first phase of the subway line’s construction) is already quite expensive. But unlike Georgetown, it still has a lot more room to grow. The MTA expects 30,000 new residential units to be constructed due to the new line. If Georgetown remains restrained in the amount of new residential construction it allows, it follows that the impact to property values will be even more significant.

To be fair, residential growth isn’t completely absent from Georgetown. Between the projects under construction and those planned, Georgetown will probably gain another 500-800 new residents in the next five years or so. Even proportionately speaking, that a lot less that what the Upper East Side is expecting, but it’s still significant.

So if and when the plans move forward, it seems perfectly reasonable to expect the property values to edge up a little faster. And since property values generally reflect the future value too, these increases should start to have an impact years before the first trains roll through.

Of course given the insanely rapid gentrification of neighborhoods like Logan and Shaw, maybe by the time the plans are announced, Georgetown might need it just to keep up the pace.

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One response to “What Would Metro do to Property Values?

  1. Pingback: Albrecht Muth goes to trial

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