How Does Development In An Area Affect The Price Of Existing Properties?

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So you are looking to buy a house or a condo and you want to know how change in your area may or may not affect the future resale price. It’s a smart move on your part to give consideration to changes in the area down the road (as much as you can) but the answers are not all that straight forward. There are a number of questions that you need to know the answers to:

  • Will a big condo development nearby affect my property in a positive or a negative way?
    1. How big is the project? How many years will it take to build? How much will it impact traffic in the area during construction?
      A long project that impacts traffic could negatively impact price in the short term and depending on the project it may be a positive or a negative longer term impact.
    2. How high is the building? Will it block the view from my condo or will it shade the sun from my backyard?
      Both of these issues might negatively impact the price of a specific property.
    3. What is the quality of the building?
      A higher end luxury building may include higher end retail on the ground floor, from designer clothing stores to upscale restaurants and up the walkability index in the neighborhood. Often home buyers will pay more for the luxury of being able to walk to their favourite restaurant. A lower end building may bring down the desirability of an area.
  • Are you looking to buy in an area that has protected land adjacent for example a public park or a school or government building?
    Living in an area that is protected from development nearby can be seen as a desirable attribute.
  • Are there proposals for commercial, city or government projects in the area?
    1. Will the city be building a new subway or LRT line close by?
      Even though the disruption can be considerable in the short term, transportation can be a huge draw for people of all ages. As car traffic in the city only becomes more congested, this will only make a property near public transportation more desirable.
    2. Are there plans for the opening of a major local employer, such as a community college or hospital?
      Not only can it increase your home’s value, it can give local landlords a larger pool of tenants to choose from and the chance to charge higher rents.
    3. Is there a proposal for city built housing in the neighbourhood?
      Affordable housing that replaces vacant or abandoned properties or other blighted conditions will likely have a positive impact on surrounding properties. It seems to depend on the degree of concentration of development (whether new construction or re-habitation) where an over concentration of units in a neighbourhood may result in stagnation or declining property values.
    4. Are there proposed zoning changes for your area?
      There have been major changes to zoning proposed in Toronto, and zoning changes can have a significant positive or negative impact on an area.
  • Is there a new housing development being proposed nearby?

The quality of construction of the new project is critical to how it will impact the neighbourhood. For example, new styled construction in a historic area can be jarring especially if there are many units on smaller lots. That type of construction will cheapen the value of the whole area. Whereas elegant spacious new homes being built on larger lots will complement the existing neighbourhood and add value.

A good example of how adjacent development can impact price can be seen at the corner of Yonge & Bloor Streets in Toronto. The units at 1 Bloor St East (a brand new condominium building) are already being impacted by the current construction of the mega tower 1 Bloor St West that is taking place on the other side of Yonge Street. Any unit that is facing west where the tower is being built, will have it’s view obstructed and lose some of it’s sunlight…which naturally, will have a negative impact on price. However, The One as it is called, will be the tallest building in Canada when it is completed in 2023 (apart from the CN tower). It will be an iconic mixed-use complex housing an 84 storey condominium, hotel and retail tower by Mizrahi developments and designed by world-renowned Foster & Partners with acclaimed Core Architects. There will be 600 parking spots below and an indoor PATH to the subway as well as a luxury shopping mall that will house proposed flagship retailers such as Apple. The resulting structure will help positively transform the corner of Yonge & Bloor and bring further value to the existing condo units at 1 Bloor St East.

As you can see, change in an area can impact value in both a positive or a negative way. There are many factors to consider in analyzing any property that you are considering purchasing and the proposed projects that may impact its price. A good real estate agent will help you safely navigate these turbulent waters before you buy.

I would be happy to discuss these issues with you and help you to evaluate your options. You can reach me at 416-834-3688 or leabarclay@rogers.com.

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