- Iacono, Michael and David Levinson (2011) Accessibility Dynamics and Location Premia: Do Land Values Follow Accessibility Changes? (working paper)
The structure of transportation networks and the patterns of accessibility they give rise to are an important determinant of land prices, and hence urban spatial structure. While there is ample evidence on the cross-sectional relationship between location and land value (usually measured from the value of improved property), there is much less evidence available on the changes in this relationship over time, especially where location is represented using a disaggregate measure of urban accessibility. This paper provides evidence of this dynamic relationship using data on home sales in the Minneapolis-St. Paul (MN) metropolitan area, coupled with disaggregate measures of urban accessibility for multiple modes, for the period from 2000 to 2005. Our investigation seeks to track the effects of marginal changes in accessibility over time, as opposed to static, cross-sectional relationships, by using an unconventional approach in which the unit of observation is a ``representative house'' for each transportation analysis zone in the region. This approach allows us to control for changes in structural attributes of houses over time, while also isolating the effect of changes in accessibility levels. Results of this approach are compared to a cross-sectional model using the same variables for a single year to illustrate important differences. These differences are discussed in terms of their implications for practitioners and for further investigations of the relationship between transportation, location and land value.
The abstract buries the lede. The average cross-section effect (that is the long - term accessibility) shows access is related to land value. The marginal effect (that is the change in land value due to the change in accessibility) is much, much weaker if not nonexistent (depending on the model). This suggests there are diminishing returns to access in mature networks.