Property in Somerville’s Green Line corridor getting pricey

Property values on sites within a half mile of the proposed Green Line stops increased 20 percent faster than Somerville as a whole.Pat Greenhouse/Globe staff

It’s been pretty clear the proposed Green Line Extension has boosted property values in Somerville, even before major work has begun.

Now a pair of researchers at the Massachusetts Institute of Technology have come up with an estimate of just how big that boost might be. Property values on sites within a half mile of the proposed Green Line stops increased 20 percent faster than Somerville as a whole. This is a city where the housing market is already on fire.

In their newly completed master’s thesis, Austin Paul and Stacey Spurr, students at MIT’s Center for Real Estate, looked at values of investment properties — apartment, retail, and office buildings — since the proposed stations were announced in 2008.

And once the new line is up and running, the Green Line’s effect on real estate prices could be much larger.

“It’s an academic exercise in some fashion,” Paul said. “But we’ve probably only seen prices go up 40 percent” of where they may ultimately end up.

The paper comes as state transportation officials are revising the troubled project, which has ballooned in cost to $2.3 billion. Part of their solution is to ask Somerville and Cambridge to contribute $75 million toward the project. Those cities, in turn, are talking with real estate developers along portions of the line about how they might chip in.

This so-called value capture — harnessing increased property values along rail lines to help finance their construction — is an increasingly popular way to pay for transit projects, but it has proven hard to implement in Massachusetts. While big landowners clearly benefit from proximity to transit, asking them to pony up after they’ve already planned projects can throw awry their financial projections, Paul and Spurr said.

And, they note, despite the months of uncertainty around the future of the Green Line and threats from the Baker administration to pull the plug, none of these property investors have pulled out yet.

“The investment community, ultimately, is really confident this is going to get done,” Paul said.