The value of a promise: housing price impacts of plans to build mass transit in Ecatepec, Mexico

Author: Flores, O. (2011)

Journal: Working Paper, Lincoln Institute of Land Policy.

Keywords: Bus Rapid Transit, BRT, House Prices, Anticipated capitalization of masstransit in house prices, project announcement effect on house prices, differential impactof project announcement on house prices, urban land markets, political credibility

This research explores whether announcement of plans to build mass transit infrastructure had an effect on housing prices in Ecatepec, a fully urbanized municipality in the northeastern fringe of the Mexico City metropolitan area. The analysis compares prices of properties located within one kilometer of the future bus rapid transit (BRT) corridor with those of properties sold within the same distance of a similar corridor where no mass transit was slated to run. Differences are estimated before and after the announcement. The results contradict the hypothesis that transit project plans trigger an immediate windfall for property owners who capitalize on the expected benefits of enhanced accessibility before the start of operations. Instead, the mass transit plan appears to have had no impact on prices of lower-quality properties and in fact reduce rather than increase the prices of higher-quality properties.

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