What light rail will mean for property values

near the planned 21st Street light-rail station
Darrell Grewe lives near the planned 21st Street light-rail station. “We’ve been here 50 years, and it’s time to get out,” he says. Photo by Sheila Regan

The construction of a light-rail transit network in the Twin Cities has brought billions of dollars of commercial and residential development to the neighborhoods around stations on the Blue and Green lines. According to estimates published by the Metropolitan Council, the population within a half-mile of the proposed stations is expected to grow by 56% by the year 2035.

When the dust settles on the Southwest Light-Rail Transit project in 2023, some homeowners in the Kenilworth corridor will struggle to adjust to the change, but experts say they’re unlikely to suffer financial losses. Generally, research done on the Twin Cities’ past LRT projects, as well as studies on LRT projects in other states, suggests that light rail increases property values.

“Where the existing Green and Blue lines have been built — in every situation, home prices have gone up,” said Heather Worthington, the director of long-range planning for Minneapolis’ Community Planning and Economic Development department. “The implementation of light rail or other high-frequency transit typically translates to higher property values in those areas.”

A Minneapolis Area Association of Realtors (MAAR) study published in 2016 found that median home prices near the Blue Line were higher — by about $26,000 — than in other areas of Minneapolis. The study also found that “LRT neighborhoods tend to have greater price stability marked by less dramatic swings.”

Lucy Galbraith, the director of transit-oriented development for Metro Transit, said data shows that home values along the Blue Line increased when the Green Line opened. Development along the corridor of the planned Green Line extension — which will reach from Target Field to Eden Prairie — is already happening in anticipation of the benefits to come, she said. Blue Line development only jumped into high gear after the completion of construction.

“It’s kind of a network effect,” Galbraith said. “The more places you can get to on the network, the more valuable the network is. It’s sort of like when telephones first came out. Having 12 people with phone lines wasn’t very useful, but eventually, it was taken for granted that you have one.”

There are currently 4,000 units of housing planned along the Green Line extension. Along the original stretch of the Green Line (excluding Downtown Minneapolis), there are a total of 6,948 units of housing either already constructed or in the works.

Expensive real estate

One of the stops along the Green Line extension lies on 21st Street as it intersects with the Kenilworth trail. That stop will be located in the Kenwood neighborhood, an area where the average home price in 2019 is $1.1 million, according to MAAR data.

“This area of the city has some of the most, if not the most, expensive real estate,” Worthington said. She said multi-unit developments are atypical in Kenwood “because the price of the real estate is so high that it’s often too expensive for most builders to acquire a single-family home, tear it down and build a higher-density lot.”

Minneapolis’s 2040 plan, yet to be approved by the Met Council, calls for the neighborhood around the 21st Street station to be designated as small-scale residential housing. Under the current plan, up to three units (i.e., triplexes) will be permitted and building heights are slotted to be 1–2.5 stories. (The initial version of the 2040 plan would have allowed building heights of up to 4 stories near the station.)

How will an area already packed with high-priced, single-family homes be affected by light rail?

Worthington said the likelihood of light rail causing Kenwood home prices to drop is extremely unlikely.

“That would be stunning,” she said. “I would also note that, from a zoning standpoint, this area has been highly protected over time, and that in and of itself has assisted in the retention of their high value more than anything, and it is yet again protected in the comp plan.”

The future site of the 21st Street light-rail station.
The future site of the 21st Street light-rail station. The Green Line extension is scheduled to open in 2023. Photo by Sheila Regan

A rural oasis

The 21st Street station is located at the entrance of a woodsy trail that leads to Cedar Lake East Beach — known colloquially as Hidden Beach. Hidden Beach was once known as a popular skinny-dipping spot. While it’s possible that such activities continue to take place, if you visit the beach on an average summer day, you’ll see a scene that’s not unlike other popular beaches in Minneapolis — a mix of families and adults enjoying the water.

The beach and the surrounding neighborhood evoke a sense of an idyllic rural oasis tucked away inside a city. Between Cedar on one side and Lake of the Isles on the other, Kenwood has remained a neighborhood isolated from urban noise and traffic, while maintaining close proximity to city amenities.

“This is more of a rural feeling in the middle of the city,” said Diane Rand, a Kenwood neighbor who lives a couple of blocks from the future 21st Street station. Recently, with two REI walking sticks in hand, Rand finished up her hike along the Kenilworth Trail, stopping at the path closure at 21st Street.

“I think this will be my last walk down here,” Rand said. She has trepidation about the noise that will come with the station and about the loss of trees. “My biggest concern is that they took this beautiful forest in the middle of the city — with our lakes, which is why people move here — and destroyed it,” she said. “It’s heartbreaking.”

A retired real estate agent, Rand doesn’t think her home’s value will be affected, but she believes her neighbors’ homes, which directly overlook the station, will. “I think the other people that are backing right up to it — it’s definitely going to affect their value,” she said.

Increased noise that comes from living near a light-rail station is one of the “nuisance factors” that comes up in research around light-rail transit and real estate.

A 2018 paper focused on Seattle found that the non-transportation externalities of light rail, such as “noise and higher auto congestion near stations” could outweigh the benefits for neighborhoods already well served by bus routes. (Planners’ primary goal for the Green Line extension is not to serve the neighborhoods between the lakes but to connect Downtown Minneapolis to the western suburbs.)

At a community engagement meeting in July, Sean Thorud, who lives near the future Bryn Mawr light-rail station, was one of about 100 neighbors from Minneapolis areas along the new line that met to see plans for the stations and hear from Metro Transit representatives.

Thorud, who is a realtor, said he is hopeful the new line would increase his home’s value, but he has nonfinancial misgivings. “How will it change some of the trails and walkways to get to it?” he asked. He said he believes North Minneapolis is a “crime area” and expressed concerns about “what kind of element” light rail would bring through his Bryn Mawr neighborhood.

Brad Colehour, meanwhile, who lives on the North Shore of Cedar Lake, said his biggest concern is the potential damage construction will bring to his home. “I’m expecting cracks in the walls and pictures falling,” he said. “I’m hundreds of feet away.”

Still, Colehour thinks over the long term, his home value will go up. “It’s that period of construction that bothers me,” he said. “When it’s all said and done, it will be a good thing, I hope.”