Graduation Year

2026

Date of Submission

4-2026

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Peter Kelly

Abstract

This paper estimates the capitalization effect of express lane congestion pricing on residential property values in the San Francisco Bay Area, exploiting the staggered rollout of US-101 express lanes across two phases — Phase 1 (February 2022) and Phase 2 (March 2023) — alongside the single-phase opening of I-880 express lanes (October 2020). Using a two-way fixed effects difference-in-differences (DiD) design with continuous treatment intensity measured as inverse Euclidean distance to the nearest toll segment, I estimate log-linear specifications that yield percentage-interpretable capitalization effects robust to right-skew in Bay Area home values. The preferred log specification finds that neighborhoods in closest proximity to the express lane toll segment experience an approximate 2.4% higher value for US-101 Phase 1 neighborhoods (implied $42,722 at corridor mean), 1.7% for Phase 2 ($29,714), and 3.7% for I-880 ($31,955). A triple-difference specification stacking all three corridors allows for comparable and significant capitalization across all phases, with corridor and neighborhood fixed effects absorbing time-invariant heterogeneity. Quadratic robustness checks reveal the treatment effect is concave across all three corridors. Heterogeneous effects by property type show that capitalization is generally concentrated in mid-sized family housing along US-101 and broadly distributed across all tiers along I-880, consistent with a commuter-driven mechanism in which car-dependent suburban households place the greatest premium on reliable express lane access.

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