We know what drives property values - the attractiveness of a location. There are certain characteristics that make a location more attractive than others and the convenience of commuting to work is one of the most important. The new train station, which we'll call the Black Rock Train Station (located on the Fairfield Metro property), will provide Manhattan commuters with just over a hour of travel time. There is already some anecdotal evidence that buyers have begun to purchase homes in Black Rock in anticipation of the train station, which is expected to be completed by the fall of 2011. The addition of the Whole Foods store also adds value as will the businesses that develop around the train station.
There have been many studies over the years which try to quantify the value of a train station for homeowners. For residential properties, there is a sweet spot in not living too close to a train station so as to avoid noise and traffic congestion, but close enough to enjoy the commuting benefits. Black Rock is far enough from the train station to avoid the noise and most of the traffic congestion. Most traffic to the train station will come from the north from I-95 or Black Rock Turnpike or via Grasmere Avenue and Kings Highway. Some commuters may use Fairfield Avenue, but properties on the water side of Fairfield Avenue will likely not experience any increase in traffic.
A study in Dallas found that residential property values within ½ mile of a train station (within walking distance) were worth 39% more than those further away (Weinstein & Clower, 1999). The planned trans-Hudson commuter rail tunnel is expected to increase home prices within ½ mile of the train station by $29,000 and homes between ½ mile and two miles by $19,000. Train stations with parking facilities have a higher positive impact on property values (Bowes & Ihlanfeldt, 2001). Residential properties within ¼ mile of a train station are found to have lower value than those further away (Bowes & Ihnlanfeldt, 2001). This means all residential properties in Black Rock should see a boost in sale prices as a result of the train station. The question becomes how much and when will it occur?
It's too early to see the year end results, but a quick look at the MLS data suggests that the median prices went down in Fairfield 2009 compared to 2010 and stayed relatively the same in Bridgeport, Shelton, Stratford, and Trumbull. There were also fewer sales in Bridgeport, Trumbull, and Stratford than last year. In Black Rock, however, both sales prices and number of sales have increased over 2009. Sales prices are up 9% and number of sales are up 14% in Black Rock. So perhaps the new train station is already having an effect. Savvy investors should consider Black Rock now BEFORE the trains start leaving the station. This is an excellent time to buy during the normally slow winter months, when there are fewer buyers to compete with, and while mortgage interest rates are just barely above 4%.
Bowes, D. R., & Ihlanfeldt, K. R. (2001). Identifying the Impacts of Rail Transit Stations on Residential Property Values. Journal of Urban Economics, 50, 1-25.
Strunsky, S. (July 19, 2010). "Railroad tunnel connecting N.J., N.Y. will increase property values, study says." The Star Ledger.
Weinstein, B., & Clower, T. (1999). The Initial Economic Impacts of the DART LRT System. Denton, Texas: University of North Texas, Center for Economic Development and Research, report prepared for the Dallas Area Rapid Transit District.