Transit villages-dense, mixed-use communities near rail stops-could increase rail ridership and reduce automobile dependency; however, few good examples exist in the U.S. today. Barriers to building transit villages include questionable market viability, conservative lending practices, and neighborhood opposition to multifamily housing. This paper shows, however, that there is a reasonably strong market demand for well-designed transit-oriented neighborhoods. After viewing visual images of simulated transit villages, more respondents from the San Francisco Bay Area expressed a willingness to live in a moderately dense community with nice amenities than in one with a third lower densities but little neighborhood open space or consumer services. Many current occupants of transit-based housing in California are young professionals living in one or two person households with just one car. What most distinguishes tenants of transit-based housing is their tendency to work in downtowns and other locations well-served by rail transit. The demand for good quality housing near rail has allowed some rail-served apartments in the Bay Area lo command rent premiums. Strong market interest in rail-based housing, coupled with recent state enabling legislation, bode favorably for the future of transit villages in California.