Walk and Ride

One of NJ Transit’s most significant capital improvements in the last decade has been Midtown Direct service on the Morris & Essex Line. Before Midtown Direct, Morris & Essex trains terminated in Hoboken, where Manhattan-bound commuters had to transfer to PATH trains to get across the Hudson River. Beginning in 1996, however, some trains were rerouted to terminate in New York’s Pennsylvania Station, saving many passengers 20 to 40 minutes in commuting time every day. This study quantitatively evaluates the impact of Midtown Direct on residential property values within walking distance of twelve study stations between East Orange and Madison.

Time-series and hedonic price modeling of 78,000 sales transactions recorded between 1993, three years before Midtown Direct service began, and 2003 revealed that:

1. Residential properties within one-half mile of all study stations served by Midtown Direct trains in the AM peak times increased in value by approximately 113 percent between 1993 and 2003 (accounting for inflation). Residential properties located farther away from Midtown Direct study stations (between one-half and five miles) experienced an increase of less than 80 percent.
2. Homebuyers paid considerably more to be within walking distance of stations with Midtown Direct service in 2003 than they did eleven years earlier. In 1993, on an average property sale price of $337,238 (in 2003 dollars), the relative value of being within walking distance to stations, compared to other property attributes such as number of rooms and school quality, was -$28,045; in 2003, it was $89,965 on an average property sale price of $447,313. By contrast, the relative value of being two to five miles from these stations decreased significantly in the same time period: from $30,112 in 1993 to -$17,268 in 2003.
3. The area within one-half mile of some stations gained in value more than areas around other stations. Properties near the Madison, Maplewood, South Orange, and Short Hills stations increased in value by more than 100 percent between 1993 and 2003 (in 2003 dollars). Around the East Orange, Brick Church and Highland stations, by contrast, properties increased in value by less than 50 percent. One possible reason for such a discrepancy is uneven Midtown Direct service: the towns with more frequent service in the AM peak fared consistently better than those with little or no Midtown Direct service.

The findings of this thesis illustrate that NJ Transit’s investments in Midtown Direct were well spent: the service had an immediate and desirable impact on real estate values and economic development near stations, and further improvements should be pursued. This thesis also shows that there is a strong market for housing within walking distance of stations. Developers, as well as municipal, county and state governments should ensure that this demand leads to the construction of mid-dense, mixed-use development that encourages residents to walk and ride the train.