Patrick Farrell writes about urban economics and transportation.
These latest developments follow years of questions over the project’s status resulting from political and legal uncertainty. Through it all, though, residents of Montgomery and Prince George’s counties have been enthusiastically endorsing the Purple Line — with their wallets.
Despite the twists and turns of the Purple Line’s development, there already have been large increases in property values near planned stops. In a new investigation of the project’s impact on property prices, former Washingtonians David Corcino, Eric Parolin and I find that house prices are up roughly 10 percent for properties within half a mile of planned Purple Line stops, relative to properties farther away. Rather than needing decades to reflect this new transportation option, as a recent opinion piece urging the project’s cancellation mistakenly asserted, the area has already seen tremendous shifts in the local property market that reflect the expected value of this transit investment for residents.
Our analysis drew on a comprehensive data set of nearly all residential property transactions in Maryland for more than a decade. Each transaction includes attributes of the property that allow us to compare similar properties, and the data set allows us to observe repeat sales of many of the properties. To estimate the price impact caused by the Purple Line, we compared the sales prices of properties near planned Purple Line stops with those of properties slightly farther away before and after critical moments in the project’s development.
The 10 percent price premium we discovered is the result of a steady appreciation in property prices as the public has become more confident in the project’s completion. Even before construction began in August 2017, property prices near prospective stops were already up 5 percent more than for those properties slightly farther away. This pattern of property price increases early in the Purple Line’s development followed by much larger price increases after construction began is consistent across a variety of tests of our data.
Areas near the Purple Line are already visibly changing alongside this tremendous appreciation of residential value. Part of the property price shifts we observe may be driven by new, denser development near prospective stations. For instance, look at the change near the planned Connecticut Avenue station between earlier project documents and today, when the promise of a station has attracted new residential development near the proposed station. Some of these changes have, needless to say, been disruptive — a recent letter to the editor highlighted some of the localized costs very near construction. However, the evidence from observing tens of thousands of property transactions is of a large, broadly shared and persistent boom associated with the Purple Line.
With the Purple Line now mired in a period of deeper uncertainty than at perhaps any other point in its development, finding a path forward is critical. The experience of the Baltimore Red Line, which we also explored in our paper, provides a glimpse into the immediate impacts of the cancellation of a similar project just a few dozen miles away.
Under the administration of then-Maryland Gov. Martin O’Malley (D), properties near stops of the proposed Baltimore Red Line experienced a large increase in their sale prices as that project gained steam. In particular, during the period when both projects were under development, we estimate that being near a planned Baltimore Red Line stop was associated with almost the same price premium as we observed for stops near the Purple Line. We find that the cancellation of this project by Maryland Gov. Larry Hogan (R) led to a sudden and persistent decline in prices for these properties, knocking away most, if not all, of the value gained when the Baltimore Red Line appeared to be a reality.
Canceling the Red Line, even before construction began, was a huge blow to Baltimore homeowners. Blowing up the Purple Line at this point would likely be an even larger blow to homeowners in Montgomery and Prince George’s counties.
Walking away from the Purple Line now would be tremendously costly. The consortium and the state of Maryland must find a way to resolve their many disputes or the state must take charge of the project. While the Purple Line has been plagued with developmental issues, home buyers have already bought into it and clearly find value in being near what they expect to be a reliable, rapid and efficient commuting option.