As city plans next phase, new study reveals light-rail transit has positive effect on property prices
Light-rail transit could boost the value of your home. At least that’s the general finding of a new study from the University of Calgary.
According to new research obtained exclusively by CREB®Now and completed by Economics master’s degree student Laura Dick, LRT line development has had a modestly positive effect on the price of housing located close to stations along new lines in Calgary.
“Properties within zero to 500 metres of a station saw, on average, an increase in sales price of about 1.5 per cent compared to properties that are 2,000 metres or more away from a station,” said Dick, whose recently completed work is still to be published in an academic journal.
Basing her research on the city’s LRT expansion between October 2001 and August 2014, Dick examined what impact, if any, 17 new stations had on prices of homes of all kinds within different proximities to the stations.
What she found is homes closer to lines experienced greater increases in value once construction of the LRT stations was completed, compared with those two kilometres or more away from a train stop.
The City of Calgary would not comment directly on the study, but did reiterate its commitment to transit-oriented developments (TODs) as a means to reduce urban sprawl and traffic congestion as the city’s population is expected to grow by about 17 per cent or more in the next decade.
In particular, senior planner Joachim Mueller noted the extension of the Green Line – consisting of 11 new stations from North Pointe in the north central part of the city to Seton in the southeast – will play a central role in its plan.
“The station locations and alignment are the result of a collaborative approach to planning in which transportation and transit planning have worked from the beginning with land use planning,” said Mueller.
“The objectives of this approach were to identify the best station and alignment options in terms of transit service and operational benefits, and to best enable transit-oriented development opportunities.”
TODs are by-design high-density neighbourhoods supported by close proximities to rapid transit, he added.
“Streets and block patterns are designed to be pedestrian friendly,” said Mueller. “Developments are generally mixed use, offering an active streetscape.”
The thrust behind TODs is to make car usage optional for residents in and around these developments, representing a departure from development in previous decades which were more automobile-focused.
“Reducing the need for car ownership can be a financial benefit for households,” said Mueller.
Dick says the study’s findings support this notion.
She adds that while past studies found similar effects in other jurisdictions, none had examined the impact of LRT development in Calgary specifically.
Like much of the research conducted in other municipalities, Dick’s found apartment-style dwellings experienced the greatest benefit on pricing. For example, apartments within 500 metres experienced about a three per cent increase compared with similar housing more than two kilometres away from a station.
The study also found apartment-style properties between 500 and 1,000 metres of a station received an average boost in pricing of about 3.5 per cent compared with similar housing two kilometres away from a station.
Semi-detached and detached housing experienced increases, too – however, the impact was modest.
“We would expect for the attached homes that the presence of a new LRT station doesn’t make a difference in property value,” said Dick.
Dick’s research also found property values may be negatively affected during the construction phase of LRT stations.
This could, in turn, present an investment opportunity for speculators seeking to buy properties prior to completion and benefit from the potential upswing in pricing after a station’s completion.
For this reason, Dick recommends in her study that city council put in place measures to prevent large-scale purchases by single investors. Otherwise, real estate speculation could drive prices higher and impede lower-income earners, who potentially benefit the most from TOD.
CREB® chief economist Ann-Marie Lurie said the study is significant given it’s the first research on the subject based on Calgary housing data.
“I found it interesting with many of the results fairly intuitive,” she said. “However, these results are considered preliminary and prior to making investment decisions based on these results I would recommend further due diligence occur.”