In the literature, much evidence can be found of the impact of transit system availability on real estate values.
Calibration of hedonic pricing models, taking the availability of transit systems into explicit consideration, allows us to estimate the hedonic price of the presence of such systems in an area or in proximity to an area. According to hedonic theory, it is assumed that the price of a complex good, such as a house, can be expressed as a function of its extrinsic and intrinsic attributes: the coefficient of each attribute represents its implicit (hedonic) price. In order to consider explicitly in transportation planning the impacts of transit system investments on real estate values as external benefits, we need to estimate the hedonic price of the presence of transit systems. , Auerbach and Hines, and Christiansen and Smith. Another aspect of the problem is related to the optimal taxation in the presence of (positive or negative) externalities this topic is outside the aims of this paper, but the reader may refer to Cremer et al. This imbalance can in part be compensated by introducing local taxes on property. Since transit systems are subsidised strongly with public money and, then, by the whole society, a more equitable transit supply should be an important objective of transport policy. On the other hand, people living in areas not served by good quality transit systems suffer a double disadvantage: on transportation systems and property values. In terms of social equity, especially if there are major differences between the transit supply in different urban areas, an evident disequilibrium is created indeed, some inhabitants have available a high level-of-service transit system and, moreover, if property owners, also a benefit on the value of their properties. Note that even if the increases in property values mainly regard most of the users that live near rail stations, they have to be considered external benefits since they are enjoyed by all property owners, regardless of whether they use the transit system or live near the stations. Besides the high direct benefits due to improved accessibility, reduced generalised trip costs, and the lower environmental impacts produced by less use of private cars, investments in transit systems, especially in railways and metros, may generate an appreciable increase in property values in the zones served this benefit should be explicitly considered inside cost-benefit analyses. While there is extensive literature on such external costs which are nowadays taken into account in some transportation planning processes, less attention is devoted to external benefits that are hardly ever explicitly considered in economic and social analyses of transport investments. Usually, the external costs of transportation are associated with air pollution, greenhouse gas emissions, noise, accidents, and congestion. When a public authority invests in transportation infrastructures and/or in transit services, it generates some external (or social) costs and benefits a cost is considered “external” if it is produced by subject A and borne by subject, without any compensation between the subjects. The quality of urban transit systems also affects real estate values: the higher the quality and quantity of transit system services in an urban area, the higher the active and passive accessibility of the area, and the higher the average real estate values. Mobility and accessibility are two important factors that influence everyday life, social inclusion, and the competitiveness of firms and commercial operators. Urban transit systems play a fundamental role for the social and economic development of large urban areas, as well as significantly affecting the quality of life in such areas. Our results show that the impacts on real estate values of the metro system in Naples are significant, with corresponding external benefits estimated at about 7.2 billion euros or about 8.5% of the total value of real estate assets. The results show that only high-frequency metro lines have appreciable effects on real estate values, while low-frequency metro lines and bus lines produce no significant impacts. The model is used to estimate the external benefits concerning property values which may be attributed to the Naples metro at the present time and in two future scenarios. A hedonic model for estimating the effects of transit systems on real estate values is specified and calibrated for the city of Naples.
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