Higher income earners biggest beneficiaries of rapid transit expansion, study shows

When a new transit line is proposed or built, politicians often cite the benefits for working people, especially those with lower incomes. But new research shows the cost of housing increases in areas connected to the transit network.

UBC Okanagan economist Andrea Craig, a co-author on this simulation study, says newly constructed transit areas cause network affects, like the perception of being able to get to more job locations which in turn causes real estate prices in that area to rise.

This research looks at Millennium and Canada Line construction and what that meant for people who lived along the network over a 10-year period and how households would benefit with and without a Skytrain extension.

“From our simulations, we have that [dwelling costs] in the newly connected neighbourhoods increase by an average of just over $26 per month, and for previously connected neighbourhoods, the prices increase by an average of just over $14 per month,” Craig told CityNews in an interview.

Craig said these connection effects are also responsible for keeping lower-income households from moving to these transit hubs, and they also found people who live in areas with expanded transit access will continue pay a growing monthly cost.

“The highest-income quartiles benefit the most because they are the least sensitive to prices, and the lowest income quartile, which is most sensitive to price increases, their benefits are not statistically different from zero.”

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The study makes use of the Statistics Canada household and workplace data from 2001 to 2011, when over $3 billion helped create the Millennium and Canada Line SkyTrain expansions across Vancouver, Burnaby, and Richmond.

In completion of this research, Craig said the study does show that all income groups benefit from SkyTrain expansion.

“A policy implication of these results is that public transportation infrastructure should be funded at the regional level because an expansion in one municipality can provide significant benefits to areas already connected to the transit network. Our estimation results indicate that the willingness to pay for rapid transit in Vancouver has become flatter over time with respect to income,” the study concludes.