AN ECONOMIC ANALYSIS OF TRANSPORTATION INVESTMENT AND THE ROLE PROXIMITY HAS ON PROPERTY VALUE IN SAN DIEGO, CALIFORNIA

In general, the United States has an excellent infrastructure system, yet some areas of the country have aging and/or over-burdened railways that are at high risk of failure.  Transportation related infrastructure investment is closely linked to economic performance of a region. Improvements of a light rail, metro, or other rail transit system can play a significant role in improving the attractiveness and quality of the transportation system.  They can influence the appeal and improve accessibility for these locations and the areas around them.  This paper concentrates on evaluating the impact of transportation investment and the role proximity to the trolley station plays on property value in San Diego.  It examines changes in residential property values for 116 neighborhoods in and around the newly renovated stations between 2005-2017.  Hedonic Price Models were used to estimate how proximity to the trolley, housing characteristics (square footage) and neighborhood characteristics (crime, population, population density, occupied households, median household income and median age) affect all home (single-family, condominium and co-operative) property value in San Diego.  Neighborhood fixed effects have been used to control for the variation across each neighborhood, and the Case-Shiller index was used to control for the general housing trends in the market.  Results show that the increase in value was greater for houses closer to the nearest trolley station.  In fact, when the nearest trolley station was renovated, property value increased by 2.5% on average regardless of distance to the train station, emphasizing the notion that the renovation was good for the city as a whole.