Price appreciation near light rail

Yesterday The Denver Post had an article about appreciation near light rail. I was quoted in the article, the interview was done after 3 hours on a motorcycle at a truck stop in Louisiana, just lucky that she happened to call me while I was stopped. As the article points out, according to our preliminary studies, properties within 1/2 mile of the southeast corridor are appreciating at about 4%, while the rest of the market is down about 7.5%. There was a lot more to the interview, here is the gist of what I recall:

The important thing to remember about any study involving average home sale prices is that it only reflects the price of homes being sold at that time, not the value of a particular house, so when you see your neighborhood has gone down 7%, that doesn’t mean that your particular home has gone down by 7%. Often it is a reflection of the fact that the higher end homes on the market are not selling, either because the sellers have pulled them off the market, or because there is no market for them at the moment. Once the foreclosures clear out, we should see the median home prices stabilize. (See our 2nd quarter trends packet for a detailed discussion on that)

There are still a lot of variables in the data, so I’m working on doing a more detailed analysis of several of the corridors, including the west corridor. Transit does drive up demand for homes and therefore price. As I’ve mentioned previously, many of the people that I’ve talked with on my trip have mentioned that transit is not good where they are, and it’s a deciding factor not just in what neighborhood they move to, but what city they move to. We don’t have any data yet on the West Corridor, but anecdotally, I have seen a lot of competition for properties on the west corridor. We lost a bid on a property that was listed for around $100,000, even though we bid $25,000 over the list price. Transit and TOD are going to be one of the key factors to the health of the commercial real estate industry in Denver for the foreseeable future. The principle idea behind transit is to give commuters an alternative mode of transportation, and to reduce stress on the road system. The principle idea behind TOD is to create walkable communities so that those same people have an alternative for the other 80% of their driving, possibly allowing them to reduce the number of vehicles they have to have from 3 to 2, or 2 to one, or even none.