Neighborhoods located within a half-mile of public transit services outperformed those in areas farther from public transit based on a number of factors, according to a report released today by the American Public Transportation Association (link is external) and the National Association of Realtors®. “The Real Estate Mantra – Locate Near Public Transportation” highlighted the critical role public transportation plays in determining real estate values, revealing that commercial and residential real estate market sales thrive when residents have mobility options close by.
The report explored seven metropolitan regions – Boston; Hartford; Los Angeles; Minneapolis-St. Paul; Phoenix; Seattle; and Eugene, OR – that provide access to heavy rail, light rail, commuter rail and bus rapid transit. Residential properties within these areas had 4-24% higher median sale prices between 2012 and 2016, the report found. Commercial property near public transit also witnessed value gains in the studied cities, where four of the regions saw median sales prices per square foot increase between 5-42%.
Transportation costs in transit-oriented areas are significantly lower than in other regions, with an average annual savings of $2,500 to $4,400 for the typical household. One in four households in close proximity to transit does not own a vehicle, according to the study.
The seven sample areas were examined by residential and commercial sales performance, rent, neighborhood characteristics, local government interventions and housing affordability.
“Public transit’s benefits go beyond moving people from point A to point B,” said APTA President and CEO Paul P. Skoutelas. “Public transportation is a valuable investment in our communities, our businesses, and our country. Public transportation gets people to jobs and educational opportunities and helps businesses attract employees and customers.”
“Access to public transportation is an extremely valuable community amenity that increases the functionality and attractiveness of neighborhoods, making nearby communities more desirable places to live, work and raise a family,” said NAR 2019 First Vice President Charlie Oppler, who spoke at Monday’s press conference along with 2019 New York State Association of Realtors® President Moses Seuram. “The results of our report, conducted over multiple years alongside the American Public Transportation Association, should reiterate to policymakers at all levels of government the importance of investing in modern, efficient infrastructure that facilitates growth and helps our nation keep pace in a rapidly evolving world.”
Neighborhoods with high-frequency public transportation are in high demand. While property values and rents have risen, contributing to healthy local economies, the rapidly increasing demand for housing near public transit has resulted in constrained housing supplies.
“As the conversation surrounding housing affordability continues, public transportation agencies are critical allies in working with elected officials and community leaders in the effort to increase housing opportunities and maximize value around stations,” said Skoutelas.
Source: National Association of Realtors
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.000 MBS) lost -72 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move higher compared to the prior week.
Overview: Mortgage rates moved higher on “hopium”. Hope of a trade deal, and hope over a Brexit negotiation. While both saw a lot of progress, neither one really materialized last week.
Trade War: On Friday afternoon, President Trump said that a “substantial” Phase I deal had been reached with China and that it will be written over the next 3 week period leading up to the meeting in Chile. The Phase I deal includes major agricultural purchases by China and the tariff hike scheduled for October 15th will not happen now. They have an agreement for transparency in FX currency. Phase II will begin right after Phase I is actually signed.
Inflation Nation: The headline Consumer Price Index (CPI) YOY kept the same pace as last month. The YOY number came in at 1.7% which was the same as last month. The Core (ex food and energy) also matched last month’s YOY pace with a reading of 2.4%.
Consumer Sentiment: The Preliminary UofM Consumer Sentiment Index was much higher than expected (96.0 vs est of 92.0) and is the best reading since July.
Brexit: Hopes of a compromise increased after positive comments from after Donald Tusk, EU council president, said he had seen “promising signals” about the chance of a fresh Brexit agreement between the UK and the EU.
What to Watch Out For This Week:
The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.
It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.