Exploring the Impacts of TOD Housing Stock and Built Environments on Housing Costs in Twenty-Six U.S. Metropolitan Areas
Matan E. Singer (University of Haifa)
There is general academic and professional agreement that insufficient housing supply is a major factor driving high housing costs in large U.S. metropolitan areas and elsewhere. Housing affordability is especially a problem in transit-oriented developments (TODs) in large metropolitan areas that have been experiencing demand growth in recent years. Accordingly, supply-side advocates call for increasing housing densities, especially in TODs characterized by compact pedestrian-friendly built environments served by transit, citing evidence that links increased housing supply with lower housing cost. However, despite the general agreement over the role of housing supply in shaping housing costs, there is still a debate on whether supply-side solutions can also improve housing affordability.
This paper contributes to the debates on housing supply efforts and the “missing middle” argument by examining the relationships between the share of metropolitan housing units in three types of compact transit-rich built environments and TOD housing rent. The census block groups of twenty-six U.S. metropolitan areas with intra-urban light, heavy, or commuter rail service were classified into six categories based on proximity to rail, housing density, and walkability: three rail-proximate built-environment types (high, moderate, and low density and walkability) and their three non-rail equivalents. Additionally, the studied metropolitan areas were grouped into three clusters based on housing and transit characteristics.
The characteristics of each metropolitan area on the clustering variables and the magnitude and direction of the relationships between the clustering variables varied by cluster (Figure 1). All three clusters have a positive correlation between metropolitan rail vehicle revenue miles (VRM) and median gross rent (Figure 1a), with the strongest correlation for Cluster 1 and the weakest for Cluster 3. Conversely, all three clusters have a negative relationship between the share of housing units in a metropolitan area that are in the most auto-oriented built-environment type and metropolitan median gross rent, with the weakest correlation for Cluster 1 and the strongest for Cluster 3 (Figure 1b). In addition, Clusters 1 and 3 have a negative relationship between the rent gap, i.e., the difference in rent in the most compact transit-rich neighborhood type compared to average metropolitan rent, and median gross rent (Figure 1c). In contrast, this relationship is positive for Cluster 2, meaning that a larger rent gap in favor of TODs is associated with higher rent throughout the metropolitan area. Finally, all three clusters show a positive relationship between the share of housing units in a metropolitan area in the most compact transit-rich TOD and median gross rent (Figure 1d), with the strongest correlation for Cluster 3 and the weakest for Cluster 1.
Plotting the studied metropolitan areas by built environment type (Figure 2) further shows that the greatest diversity of housing units is found in East Coast, West Coast, and Midwest metropolitan areas like New York, Boston, San Francisco, Los Angeles, Philadelphia, Washington D.C., and Chicago, which have among the oldest and most expansive rail systems in the U.S. In contrast, auto-oriented metropolitan areas are dominated by low-density single-family housing.
Figure 1: a) Metropolitan Median Gross Rent by Metropolitan Rail Vehicle Revenue Miles (VRM); b) Metropolitan Median Gross Rent by Metropolitan Share of Auto-Oriented housing Units; c) Metropolitan Median Gross Rent by Metropolitan Area-Rail-Oriented Intensive Rent Gap; d) Metropolitan Median Gross Rent by Metropolitan Share of Rail-Oriented Intensive Housing Units
Figure 2: Share of Metropolitan Housing Units by Block-Group Type, All Studied Metropolitan Areas. Note: C1: Cluster 1; C2: Cluster 2; C3: Cluster 3.
A series of regression models were estimated to examine the relationships between the metropolitan housing stock in the three TOD types (high, moderate, and low density and walkability), i.e., the share of TOD housing units out of all the housing units in a metropolitan area, and TOD rent. The results partly support supply-side efforts, showing that in Clusters 1 and 2, a larger share of metropolitan TOD housing units is associated with lower TOD rents, although not in the most compact transit-rich TOD type. These outcomes suggest that housing practitioners could help improve housing affordability by promoting development in diverse built-environment combinations near and away from rail stations rather than focusing supply efforts on the most transit-rich TODs.
Within this context, the results provide support for the “missing middle” argument that increasing the housing supply in moderately dense environments could help alleviate housing cost pressures. Specifically, a larger share of metropolitan housing units in compact transit-rich built environments that are served by bus service is associated with lower rents in TODs with moderate densities in low-rent metropolitan areas (Cluster 1) and all three compact transit-rich built environment types in high-rent metropolitan areas (Cluster 2). Similar relationships are found for the share of metropolitan housing units in rial-oriented TODs with moderate densities.
Moreover, the share of metropolitan housing units in rial-oriented TODs with moderate densities is the only built environment type associated with lower TOD rents in metropolitan areas where rent in the most compact transit-rich TODs is higher than average metropolitan rent (Cluster 3). These results suggest that housing in built environments with moderate transit accessibility, housing densities, and walkability expands the housing options in compact and transit-rich developments in the metropolitan area, thus resulting in lower rents. Hence, housing practitioners and advocates could alleviate housing cost pressures by broadening supply-side efforts from the most compact transit-rich developments to moderately compact rail-oriented and non-rail environments.
At the same time, the outcomes also show the limitation of supply-side efforts to improve housing affordability in metropolitan areas where housing in compact transit-rich environments is valued more than the metropolitan average (Cluster 3). In these metropolitan areas, larger shares of metropolitan housing units in the most compact transit-rich built environments and in compact transit-rich environments that are served by bus are associated with higher, rather than lower, rents in compact transit-rich built environments. These outcomes suggest that there is pent-up demand for housing in the most compact transit-rich built environments in these metropolitan areas. Consequently, rents remain high even as more housing is provided in these and alternative built environments.
Matan Singer is a postdoctoral fellow at the University of Haifa. He studies the equity implications of housing and transportation policies. Before this position, Matan was a postdoctoral fellow at the Hebrew University of Jerusalem and the Technion-Israel Institute of Technology. He received his PhD in urban and regional planning from the University of Michigan.