Freight Rail and Property Values

Evidence that rail traffic harms home values.
This post is part of the research project: Northwest Coal Exports

I recently came across a fascinating research paper by a PhD candidate in economics at the University of California, San Diego. Michael Futch analyzed residential property values near several freight rail corridors in Los Angeles that experienced substantial changes in rail traffic.

Here’s what he found:

…an increase in rail traffic by 10 million gross ton miles per mile (MGTM/mi) causes a 0.7 percentage point lower growth in home values within a 1/3 mile band around the tracks.

For the uninitiated “gross ton miles per mile” is a rail term used to measure freight rail density. It is defined as the movement of one ton of freight a distance of one mile, including the train weight of goods, cars and locomotives.

In “Examining the Spatial Distribution of Externalities: Freight Rail Traffic and Home Values in Los Angeles,” Futch uses repeat-sales data to track home values along three freight rail corridors near the Los Angeles seaport. Over the period of his study, two of the corridors saw big reductions in traffic volumes as planners redirected freight to the central line, called the Alameda Corridor.

It won’t surprise anyone who lives near a rail line that increased rail traffic was associated with lower property values. What I found especially interesting, however, was that he found almost perfectly offsetting gains in property values where freight rail traffic decreased. In other words, the area’s total property values were unaffected, but changes to the routing of the freight produced local winners and losers.

Futch’s conclusion seems reasonable enough to me—increased freight rail traffic probably does impair values for homes near the tracks—though it’s hard to know how much one can generalize from his study. It tracks only a relatively small area in southern California, and it covers the period that includes the inflating and bursting of the housing bubble.

I’m not aware of other research that examines that connection between rail traffic and property values, and I’d welcome reader suggestions for further reading on this subject. Even better, I’d welcome some comparable analysis of Northwest rail lines. Seeing as how parts of the region are looking at potentially huge increases in freight rail traffic—enough to carry well more than 100 million tons of coal plus the associated cars and locomotives—it might interest neighbors to know how their property values may be affected.

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Comments

  1. John Sleavin says:

    This was a narrow band. 1/3 mile wide is 1760′. Assume a 200 foot wide rail coridor and that leaves about 780′ each side of the Rail Right-of-way or about two blocks. For houses close to the track this seems to be reasonable. I can imagine it drops off quickly as you go beyond a couple of blocks from the track. I would think what is carried could be equally or even more important. Closed box cars would have far less impact that open coal trains or slow moving garbage carring trains.

    • Eric de Place says:

      Right, though there are rather nice homes in the PNW that are inside that band (e.g. Richmond Beach, Edmonds, etc).

      Futch’s analysis didn’t treat the railcar contents, though your suggestion seems reasonable. I would have to imagine that in addition to nuisance odors or dust, values would also tend to be impacted more heavily by trains that were especially loud or that caused vibrations, both of which are features of heavier loads such as coal.

      The paper isn’t very clear on the this point, but he appears to provide another set of numbers that’s not about a “band around the tracks” but rather distance from the tracks. This is what he finds:

      “Column I shows a strong negative effect of an increase in the rail density for the homes within 1/3 of a mile of a rail. This indicates that for these homes, an increase in rail density of 100 million gross ton miles per mile will cause home prices in the area to fall by -0.6 percent… The negative effect of a density increase is lessened, but still statistically different from zero, for the next set of homes 1/3 to 2/3 of a mile from the rail. A one unit increase in rail density causes a -0.3 percent fall in the home price in this zone. Finally, for homes between 2/3 of a mile and one mile from the track the negative effect disappears. The coefficient for this last group is small and positive, but not significant…”

  2. ian johnson says:

    I’d be really interested in finding out if there are impacts on prices when segments become “whistle free” zones. I mean, seeing which factors really impact the property valuation — is it the noise, the pollution, the inconvenience?

  3. Mike O'Brien says:

    Hi, Eric–

    We used to live in Lake Oswego, Oregon, where a rail line runs adjacent to houses located on the north side of the lake. In that situation, I wonder if the rail line affects the value of houses, as buyers still seem to cherish the proximity to the lake.

    Westbound trains have to run harder as there is a slight uphill slope, so the houses even get an extra spray of diesel soot and engine noise.

    Probably it would be impossible to locate a new rail line along the same route today, resistance would be strong, but in casual observation sale prices don’t seem to be affected.

  4. Jesse Wilson says:

    I think bringing the railroads into the argument against coal is a slippery slope. Railroads are a major link in our transportation system, not just freight, but people, too. If you want to encourage increased use of alternative transportation you have to consider goods as well as people. Throwing railroads under the bus (how’s that for a metaphor) is self defeating.

    If indeed rail freight reduces property values, then where shall it go to not do so? Shall it go away from the population centers it services? Sure, then we can use more trucks on our roads to deliver freight into the overcrowded city centers.

    I lived next to a RR track in Vermont years ago. Real close. I rented. I didn’t care. It was rather neat, though not heavily trafficked (Vermont y’know). What sometimes bothered me was the whistle blowing. By law, the engineer had to blow the train’s whistle at every crossing.

    There must be numerous studies describing the loss of property values due to highway proximity.

    So is it polluting highways and increased truck traffic you want? Or do you accept rail freight and work to improve the railroads (quiet whistles?, efficient engines, quieter track..).

    Your coal vs railroad vs home prices argument is a slippery slope.

    • Eric de Place says:

      I take your point, but on the other hand there really are impacts from moving freight, such as diesel exhaust, noise, traffic congestion, etc.

      I’d argue that it’s perfectly sensible for us to put up with a certain amount of those problems in order to have efficient commerce and power our economy. It’s just a question of costs and benefits. Moving high-value intermodal freight out of the Port of Seattle seems important to me. Shipping grain for sale abroad seems worth some costs. But moving coal from Wyoming to China… I don’t see how the benefits are worth the costs.

      What I’d like to do is make those costs a little clearer so that we can compared them to the benefits touted by the coal industry.

  5. Conrad says:

    I would echo what Jesse is saying. If I had to choose between living next to I-5 or a railroad, I would definitely choose the railroad. I would like to see a comparison in terms of fuel consumption and air pollution between moving freight by truck and by rail. I’m betting that rails would come out on top. Another thing to consider is that one of the main arguments against removing dams on the Columbia River is that farmers in eastern WA use barges to transport their crops. The only viable alternative to barge transport in some instances is railroad transport- so if we want to remove dams to save salmon we better be leaving the railroads intact.
    I’m not saying we should be mining coal in the US and transporting it to ship to China- but I think that our rail system for transporting goods and people is worth its weight in gold, given all the problems associated with trucks and cars for transportation. Once a rail line is abandoned and sold piecemeal, it is impossible (financially) to get it back. Once again I’ll say that the rail property/right of way is worth its weight in gold. It can be used for rail transport or kept intact as a rail-trail (I think every major trail system in King County is built on old railways). But once it is sold piecemeal it is gone forever and your only transportation option is roads/highways.

    • Eric de Place says:

      Okay, but there is one difference with coal. Unlike, say, grain it’s not a question of shipping it by rail or shipping it by truck. With coal, it’s a question of shipping it by rail or not shipping it.

      If we have evidence that freight rail shipments impair property values, that belongs in the “don’t ship coal” column.

  6. Steve Dotterrer says:

    Eric-

    I think that you are missing the point that some commentors are trying to make here. In general,rail shipment is a better mode for shipping than most other choices. Your use of arguments against freight rail for coal will be used against you, the next time you argue for more intermodal container shipping by rail. (and since the issue is a fairly trivial one in the overall evaluation of coal,making an issue of it here seems unwise).

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