My first finding was back in 2007 when the home prices fell across the board in Minneapolis except for two neighborhoods. The Seward and Longfellow neighborhoods of Minneapolis actually increased in value by 2%. This figure may seem modest, however we say some areas fall by double digits during that same time.
A San Francisco Bay Area study found that for every meter a single-family home was closer to a BART station in 1990, its sales price increased by $2.29, all else being equal (Landis et al., 1994). A 1993 study of residential properties near the 14.5-mile Lindenwold Line in Philadelphia, using hedonic price models, concluded that access to rail created an average housing value premium of 6.4%
On a $200,000 home in Minneapolis or St. Paul you would be looking at a $12,800 premium on the property due to the proximity of a light rail station.
The effect on rental property has also been a Boone for owners. A study with the BART system in the Bay Area of California compared to other properties in the County, the estimated monthly lease premium within one-quarter mile of a station was 3.3 cents per square foot and for properties one-quarter to one-half mile away, it was 6.4 cents per square foot. People don't want to be right next to the station due to noise, however they will pay a significant premium to live within a half mile (walking distance).
There is one main reason I believe that light rail will have an even higher return for home owners in the Twin Cities than other areas nationally. Snow! Would you rather sit on a train and watch all of the accidents and congestion because of one inch of snow or would you rather white knuckle it to work? A lot of people will pay more to have more time to themselves and less stress. Two hour commutes are terrible!
I believe we have just started to see the positive effects on property values in Minneapolis and St. Paul. Once the Light Rail is up and running in St. Paul you will see more building along University Avenue. If you drive or ride along Hiawatha in South Minneapolis you will see a significant number of new condos and apartment buildings that have been built. Eventually more of the grain towers will be purchased and more building will go on.
The splurge of new construction along the light rail in the Dinkytown area of the University of Minnesota has been incredible. The more these lines connect different parts of the Twin Cities the more valuable the property around each rail line will become. If you can live in the Western Suburbs of Minneapolis and travel via light rail to downtown St. Paul because you live by the light rail station imagine the time and cost savings. It will give people more options on where they can work and live and the areas that are convenient to home owners because of this access will be much more valuable.
When you are searching for a home in Minneapolis or St. Paul you may want to consider how close you are to a light rail station. Even if you don't use it, when you go to sell your home, the next buyer will likely pay you a premium for the home.