Any realtor knows the magic of the words “location, location, location,” and nearby amenities dictate the desirability of a home’s location. Whether a home is in a city, a suburb, or out in the sticks, the surrounding area can be a major factor when undergoing an appraisal for your lender’s mortgage approval
, and a home’s property value
can skyrocket or plummet based on the amenities in surrounding areas. Don’t be caught unaware – know before you buy.
Proximity to highways and major roads
We live in the land of the car and collectively drive hundreds of thousands of kilometers each day as part of a daily commute. As such, we like to be close to roads. “Accessibility to major highway and highway improvements proved to be a major determinant for increased property values in all studies,” according to a report by the Real Estate Investment Network (REIN). “Studies show that, as highway networks are created and existing corridors to the CBD (Central Business District) are improved, the value of real estate in the area increases.” That doesn’t entirely remove the sting out of out the time spent on these highways each day, but it helps.
Being close to public transportation
When it comes to public transportation and home prices, the closer the better. A study titled “The Calgary Transportation Effect: The Impact of Transportation Improvements on Housing Values in the Calgary Area” concluded that across North America, the values of homes in neighbourhoods close to mass transit had premiums ranging between 3% and 40%, depending on the different types of housing and socioeconomic positions of the real estate owners.
Real estate analyst Richard Wonzy of Site Economics in British Columbia agrees, saying that transit is a “great benefit, increas[ing] existing house prices perhaps 10% to 15%.” He also added that, depending on the lot of the property in question, it potentially “doubles or triples land values due to rezoning potential for more residential density.”
Another study conducted by the American Public Transportation Association in conjunction with the National Association of Realtors in 2013 investigated how well residential properties located in proximity to fixed-guideway transit have maintained their value as compared to residential properties without transit access between 2006 and 2011 in five regions: Boston, Chicago, Minneapolis-St. Paul, Phoenix, and San Francisco. In all of the regions the drop in average residential sales prices within the transit shed was smaller than in the region as a whole or the non-transit area, outperforming the region as a whole by 41.6%. REIN’s study on transportation in the Greater Toronto Area (GTA) concluded that “Real estate prices in key neighbourhoods will increase more quickly than other regions due to the improved transportation linkages provided. Improved accessibility drives real estate demand.”
The same study also found, however, that there are negative implications, such as property crime, noise, and increased traffic affecting properties located in the immediate vicinity of some transit stations. A study from the University of Western Ontario concluded that the relationship between home values and urban rail transit is mixed: “many neighborhoods in closest proximity to the O-Train route saw a negative impact on housing prices, while many areas located further away experienced a significant increase.” Helpful, right?
Being close to train tracks
Even if you’re on the “right” side of the tracks, living next to the railroad can be a noisy affair. Commuter trains typically operate during daytime hours – busiest during rush hour – whereas the rumblings and whistles of a freight train can awaken nearby residents all hours of the night. Chances are, you’ll probably be able to buy a property located near train tracks for a good deal. If you plan on reselling your home, however, know that there’s a chance it could cost you: A 2004 study in Entrepreneur Magazine evaluated the impact of freight railroad tracks on housing markets. It only studied a small area in Ohio, but found that there was “an average loss in value between $3,800 and $5,800 (5%-7%) for houses under 1,250 square feet located within 750 feet from a railroad track. Larger houses showed mixed results.”
Being close to or right on the water is one of the biggest attractions to buyers of recreational property. According to a Re/Max 2016 Recreational Property report, of 41 featured regions, all but 3 boasted higher waterfront properties than non-waterfront properties. Wonzy says that waterfront “can almost double values if right on the water or add 25[%] if very close by the water.” He adds, “Views can add 10% to 20% to the value of the home.”
If you want to be able to run errands and participate in activities without hopping into your car, prepare to pay for it. In a 2009 paper by Impresa, Inc. of 15 housing markets in the U.S., findings concluded that “houses with the above average levels of walkability command a premium of about $4,000 to $34,000 over houses with just average levels of walkability.” But Vancouver residential real estate appraiser Leigh Walker says that while buyers may want the ability to walk places, appraisers don’t place any value on a “walk score.” He points out that areas with large, multimillion-dollar homes can have poor walkability and still be desirable, while a “rattier” area in a downtown core with plenty of amenities nearby still won’t be desirable. Still, all things being considered, Toronto real estate agent Catherine van der Oye says that walkability has really come onto the radar of home buyers in the past few years. “People really want to have that experience of being able to go and walk around,” she says. “They want that kind of lifestyle.”
Even if you don’t have children, you can pay a premium for the privilege of living next to a good school (although the school ranking system itself is oft-maligned). According to real estate brokerage TheRedPin, you’ll spend anywhere from a 20-36% premium to live near close to the best schools in the Greater Toronto Area – unless you’re in a condo, for which prices don’t seem to matter much. Van der Oye says that it’s often the case that school districts improve as an up-and-coming area gentrifies; young, upwardly-mobile buyers get into an affordable neighbourhood, expand their families, and are active in improving the local schools, which may have been floundering.
- Noise in general has a negative impact on property values. A paper published in the Journal of Transport Economics and Policy found that if you live close to an airport, for example, there’s a discount of anywhere from 0.5 % to 0.9% per decibel at noise exposure levels of 75 dB or less.
- Got a wind turbine in your backyard? Ontario property assessment company MPAC concluded that there is “no statistically significant impact on sale prices of residential properties in these market areas resulting from proximity to an IWT,” although another analysis stated that properties within 1 km of a turbine could have up to 4% difference in value than a home more than 1 km away.
- If you’re a baseball fan, there’s a good chance you’ll pay a premium to live within walking distance of the ballpark. Real estate search company Trulia found that areas around 18 of the 29 MLB stadiums in the U.S. had higher median home values compared to rest of the city where they were located.
- Neighbours aren’t an amenity, but they can definitely affect your home value. Take a look up and down the street to see if other owners in the neighbourhood are properly caring for their lawn and their home. Transitional neighbourhoods can hold hidden gems for home buyers, but if your neighbours put the shabby in ‘shabby chic’ then property values might be down and out as opposed to up and up.
- Access to parks and green spaces can command a premium, especially in cities like Vancouver, where Walker says that people are “trading space for place” and forgoing a yard for a smaller place closer to the downtown core and make use of the public spaces.
- What are the future development plans for the area? Gentrification, for all of its problems, is good news for property values. “People who are astute enough to look at the long-term plans for a certain area, they cash out in the end,” van der Oye says. “Some people look peripherally, and some people look forward.”
If amenities aren’t important to you, then perhaps they don’t factor into your home-buying decision. But in order to buy – and sell – smartly, you should know how much the local features factor into the value of your home. “One of the things that first-time buyers need to be aware of is that when they go to sell their property, they might not be selling to the same first-time buyer,” Walker says. “I find a lot of people just ignore the things they don’t really care about when they’re buying a place, but they need to be aware of those because when they go to sell it, they could be important for the buyer.”
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