I recently came across a fascinating research paper by a PhD candidate in economics at the University of California, San Diego. Michael Futch analyzed residential property values near several freight rail corridors in Los Angeles that experienced substantial changes in rail traffic.

Here’s what he found:

…an increase in rail traffic by 10 million gross ton miles per mile (MGTM/mi) causes a 0.7 percentage point lower growth in home values within a 1/3 mile band around the tracks.

For the uninitiated “gross ton miles per mile” is a rail term used to measure freight rail density. It is defined as the movement of one ton of freight a distance of one mile, including the train weight of goods, cars and locomotives.

In “Examining the Spatial Distribution of Externalities: Freight Rail Traffic and Home Values in Los Angeles,” Futch uses repeat-sales data to track home values along three freight rail corridors near the Los Angeles seaport. Over the period of his study, two of the corridors saw big reductions in traffic volumes as planners redirected freight to the central line, called the Alameda Corridor.

  • It won’t surprise anyone who lives near a rail line that increased rail traffic was associated with lower property values. What I found especially interesting, however, was that he found almost perfectly offsetting gains in property values where freight rail traffic decreased. In other words, the area’s total property values were unaffected, but changes to the routing of the freight produced local winners and losers.

    Futch’s conclusion seems reasonable enough to me—increased freight rail traffic probably does impair values for homes near the tracks—though it’s hard to know how much one can generalize from his study. It tracks only a relatively small area in southern California, and it covers the period that includes the inflating and bursting of the housing bubble.

    I’m not aware of other research that examines that connection between rail traffic and property values, and I’d welcome reader suggestions for further reading on this subject. Even better, I’d welcome some comparable analysis of Northwest rail lines. Seeing as how parts of the region are looking at potentially huge increases in freight rail traffic—enough to carry well more than 100 million tons of coal plus the associated cars and locomotives—it might interest neighbors to know how their property values may be affected.