TOD Index™ December 2014

www.TODindex.com

Acknowledgements:

Dr. Renne would like to thank Tara Tolford for her work on the GIS data analysis and for

assistance in the production of this report.

Creator & Author:

Dr. John L. Renne, Ph.D., AICP Founder and Managing Director, The TOD Group

Associate Provost, Director and Associate Professor, University of New Orleans Senior Visiting Research Associate, University of Oxford

jrenne@thetodgroup.com

jrenne@uno.edu 504.717.1744

For more details on the methodology, please visit: www.TODindex.com

2013 :

Year of the

nation’s highest

transit ridership

in 57 years at

over 10.7

billion trips

Contents:

Overview 1

Criteria for Categorizing

Station Areas

1

TOD Index—Home Values 4

TOD Index—Rental Values 6

The Affordability Paradox:

Location Affordability

8

Need for Converting

Hybrids and TADs into

9

Transit-Oriented Developments (TODs) are defined as walkable, mixed-

use and dense communities within a half-mile of a train station while Transit-Adjacent Devel-

opments (TADs) refer to station areas that are characterized by low-density, auto-oriented

land uses. Research indicates that gross housing densities should be at least 8 units per acre

(which equals 4,000 households within an area radiating a half-mile from a train station) in

order to support transit ridership. ¹ Walkscore.com rates communities with a 70 or greater

(out of a possible 100 score) as Very Walkable or a Walker’s Paradise (above 90).

The TOD Index™ provides a new benchmark to track both home and rental values

in train station areas across the United States. The TOD Index includes stations categorized

as TODs, Hybrids and TADs. Each category is also benchmarked against the national Zillow

Home Value Index (ZHVI) or the national Zillow Rent Index (ZRI).

Evaluating the market performance of TODs relative to national trends is of significant value

because of the following factors influencing 21st century real estate trends:

The national housing market has undergone significant shifts following the 2008

recession

A growing percentage of Americans, including a large percentage of the millen-

nial generation prefer to live in urban areas with high-quality transit access

Investors, developers, planners and policy-makers are looking to identify metrics

to measure the success of TOD across the United States

The TOD Index allows for comparing performance in the for-sale and rental housing markets

from the neighborhood to the national scales.

1 See Renne and Ewing, 2013 for more information: http://scholarworks.uno.edu/cgi/viewcontent.cgi?article=1016&context=unoti_pubs 2 See: http://www.apta.com/mediacenter/pressreleases/2014/Pages/140310_Ridership.aspx

Overview

Criteria for Categorizing Station Areas

The United States has approximately 4,000 passenger train stations that are an integral part

of serving over 10.7 billion transit trips in the United States in 2013, the highest ridership in

57 years.2 The following criteria are used to classify stations across in the United States along

a TOD–Hybrid–TAD spectrum.

1,441 stations across the US are categorized as TOD Stations, which meet the fol-

lowing criteria:

1. Gross housing density must be greater than 8 units per acre across the half-mile

station precinct

AND

2. The average Walk Score for the station area must be 70 or greater

1 TOD Index™

Examples of TODs include Portland’s Pioneer

Square and Bethesda,

Maryland

1,180 stations across the US are categorized as

Hybrid stations which are defined as:

1. Gross housing density must be

greater than 8 units per acre

across the half-mile station

precinct

OR

2. The average Walk Score for the

station area must be 70 or greater

Examples of Hybrids include Dallas’ Mockingbird Station and Denver’s Englewood Station

Pioneer Square Transit Mall:

Portland, OR

Gross Housing Density: 14.84 units per acre

Walkscore: 100

Index Category: TOD

Image source: https://www.planning.org/greatplaces/gallery01/image20.jpg Bethesda, MD

Metro Station

Gross Housing Density: 9.69

units per acre

Walk Score: 94

Index Category: TOD

Image source: Google Street View, September 2014

Image source: http://www.denver-cityscape.com/images/denver4305-53.jpg

Englewood

Station

Denver, Co

Gross Housing Density:

2.43 units per acre

Walk Score: 83

Index Category: Hybrid

2 TOD Index™

1,775 stations across the US are categorized as

TAD stations which do not meet either

criteria for a TOD or Hybrid.

Examples of TADs include the station at Baltimore’s

BWI airport and Cisco Station in San Jose

Mockingbird Station

Dallas, TX

Gross Housing Density: 3.5 units per acre

Walk Score: 85

Index Category: Hybrid

Image source: http://madisonmarquette.com/portfolio/case-studies/mockingbird-station/

Image source: http://www.bizjournals.com/baltimore/print-

edition/2011/02/18/office-retail-space-could-be-part-of.html?s=image_gallery

BWI Airport Station

Baltimore, MD

Gross Housing Density: 0.0 units per acre

Walk Score: 29

Index Category: TAD

Image source: Google Street View, September 2014

Cisco Station:

San Jose, Ca

Gross Housing Density:

.47 units per acre

Walk Score: 20

Index Category: TAD

3 TOD Index™

during the most recent economic recovery,

which began January 2012, the growth of

home values in TODs has significantly out-

paced all other categories. During the 32

month period, average home values in TODs

has grown by 37%, as compared to 27%, 24%

and 20% in Hybrids, TADs, and the national

average, respectively. This means that the

growth of home values in TODs have out-

paced the growth of home values nationally

by a margin of 1.85-to-1.

TOD Index — Home Values

In August 2014, the average home value in

TODs was $518 per sf. The average home

value in Hybrids was $251 per sf and the

average home value in TADs was $196 per

sf. This compares to the average national

ZHVI for that same month at $149 per sf.

Therefore, the average home in a TOD was

worth 3.48 times more than the average

home in the United States.

Since 1996, homes in TODs have appreciated

about 300% as compared to 168% for Hy-

brids, 126% for TADs and 103% for the na-

tional average. When looking at the data

Since, 1996, growth of

home values in TODs

has outpaced the

growth of home values

nationally by a margin

of nearly 2-to-1.

4

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Home Values$ per s.f.

TOD Hybrid TAD National Zillow Median Home Value Index (ZHVI)

TOD Index™

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TOD Index - Home Values April 1996 - August 2014

TOD Hybrid TAD National Zillow Median Home Value Index (ZHVI)

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TOD Index - Home ValuesJanuary 2012 - August 2014

TOD Hybrid TAD National Zillow Median Home Value Index (ZHVI)

5 TOD Index™

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4Previous Month Percentage Change in Rental Values

TOD National Zillow Rent Index (ZRI)

In August 2014, the average apartment in TODs rented for $2.28 per sf. Average rent in Hy-

brids was $1.36 per sf and the average rent in TADs was $1.19 per sf. This compares to the

average national ZRI for that same month at $0.89 per sf. Therefore, the average apartment

in a TOD rented for 2.56 times the average rental unit in the United States.

When looking at the data since January 2012, the growth of rent values in TODs has signifi-

cantly outpaced all other categories. During the 32 month period, average rent values in

TODs have grown by 18%, as compared to 13%, 11% and 8% in Hybrids, TADs, and the

national average, respectively. This means that the growth of rent prices in TODs has out-

paced the growth of rent prices nationally by a margin of 2.3-to-1.

TOD Index — Rental Values Since January

2012, the

growth of rent

values in TODs

has significantly

outpaced all

other

categories.

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TOD National Zillow Median Home Value Index (ZHVI)

6 TOD Index™

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Rental Values$ per SF

TOD Hybrid TAD National Zillow Rent Index (ZRI)

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TOD Index - Rental ValuesJanuary 2012 - August 2014

TOD Hybrid TAD National Zillow Rent Index (ZRI)

7 TOD Index™

While housing costs more on a $ per sf basis in

TODs, the data reveals a paradox that TODs are

actually the most affordable places to live, at least

for now. This is due to unit size being smaller in

TODs, which means that while home values and

rent prices on a per sf basis are higher, the overall

prices make them more competitive on an afforda-

bility basis.

Table 1 shows that the average household in a

TOD and Hybrid spent a smaller percentage of

their income on housing (24%) compared to TADs

(27%) and nationally (33%). Households in TODs

also benefitted from the lowest transportation

expenditures at 13% of their income, compared to

19% for Hybrids, 22% for TADs and 18% nationally.

In total, TOD households had the largest disposa-

ble income after housing and transportation costs

considering they only spent 37% of their income

The Affordability Paradox: Location

Affordability Benefits of TODs

TOD

households

had the largest

disposable

income after

housing and

transportation

costs

Table 1: Location Affordability in TODs Hybrids and TADs

Station Typol-

ogy

Average HH Budget

% on Housing

Average HH Budget %

on Transportation

Average HHBudget % on

Housing + Transportation

TOD 24% 13% 37%

Hybrid 24% 19% 43%

TAD 27% 22% 49%

Nation 33% 18% 51%

Table 2: Income

Station

Typology

Average HH

income

Disposable

Income

TOD $55,032 $34,670

Hybrid $52,724 $30,052

TAD $63,848 $32,562

Nation $51,100 $25,039

Table 3: Distance to Downtown and Percent

Station

Typology

Average

distance to

CBD (miles)

Percent

renters

TOD 3.9 72%

Hybrid 10.6 63%

TAD 15.1 45%

Nation NA 33%

on these two categories, as compared to the aver-

age American, which spent 51% of their total in-

come on housing and transportation.

TOD households have a larger disposable income,

after housing and transportation costs, as com-

pared to any other category. Given that the aver-

age household in a TOD earns $55,032 (see Table

2), their disposable income after housing and

transportation is $34,670. TOD households have

nearly $10,000 more in disposable income as

compared to the average American. Moreover,

despite TOD households earning significantly less

than TAD residents, they have more disposable

income. Table 3 reveals that TOD households are

more likely to be located closer to downtown as

compared to Hybrid and TAD households and they

are significantly more likely to be renters.

8 TOD Index™

Across the nation, approximately 18 million people live within a

half-mile of a rail station. However, if all stations were built to a

minimum density of 8 units per acre, the country could see new

housing to accommodate an additional 26.4 million Americans,

which would correspond to 11% of the population by 2050.

However, an estimate by the National Association of Realtors

revealed that over 80% of the millennial generation wants to

live in TOD-like neighborhood. If demand continues to outpace

supply, the nation could expect housing prices in TODs to con-

tinue grow quickly, and housing affordability, now present

in TODs, to quickly become unaffordable as more and

more people compete for the limited housing. This pre-

sents the nation with a significant opportunity to develop

policies that encourage both new housing in Hybrids and

TADs, and the opportunity to build new rail infrastructure

to encourage growth and connectivity in our cities and

regions to create more TODs across the United States.

Across the United States, there is the need and opportunity to

increase the walkability and density of Hybrids and TADs to turn

them into TODs. Federal, state and local communities have al-

ready invested significantly in years past to build the rail infra-

structure – now communities, developers and investors need to

take advantage of building TODs around the stations, which

could have social, environmental and economic benefits.

Need for Converting Hybrids and TADs into

Table 4: Vehicle Ownership, Commuting and Transit

Station

Typology

Average HH

vehicle

ownership

Percent

Walk Com-

muters

Percent

Bike Com-

muters

Percent

Transit

Commuters

Combined Walking,

Bicycling and Transit

Commuting

TOD 0.6 17.4% 1.8% 38.6% 57.8%

Hybrid 1.0 10.0% 1.7% 17.0% 28.7%

TAD 1.3 4.2% 1.2% 12.2% 17.6%

Table 4 shows that the average household in a TOD owns

0.6 vehicles as compared to 1.0 and 1.3 vehicles per house-

hold in Hybrids and TADs, respectively. Nearly 58% of

households in TODs commute via walking, bicycling or

transit as compared to 28.7% of households in Hybrids and

17.6% in TADs.

Proposed Clear Creek Valley TOD, Denver, CO. Image source: www.theTODgroup.com/projects

9 TOD Index™

www.TODindex.com