Today, proximity to public transportation is a boon to an urban real estate investment, but this was not always the case.
Flight to the suburbs in the decades following World War II reflected a desire for more spacious and natural landscapes, driving up prices in areas outside of urban cores. Many downtown areas became stigmatized as they fell into disrepair.
Today however, contemporary housing patterns are characterized by the opposite phenomenon. Urban centers are at the forefront of revitalization and investment, and issues surrounding public transportation are a central political debate. Billions of dollars are being channeled into subway, light rail and streetcar systems in cities such as Toronto. This is a trend common in fact to every major Canadian city as citizens are becoming more conscious of public transit’s economic and environmental benefits. Efficient public transportation is the cornerstone of modern cities and the lifeline of a healthy network of urban communities.
This increase in demand for proximity to public transit has resulted in higher housing prices, as those in search of Toronto condominiums are discovering. People living downtown desire freedom from the hassle of a car—and they’re willing to pay a premium for it. As urban populations rise, travel via car has become increasingly burdensome and inefficient. Toronto condos are sprouting up in lockstep with the city’s transit development.
The millennial generation (30 and under) in particular has opted for housing in urban quarters. The appeal of urban living combined with a burgeoning environmental consciousness has incited a unique demand for efficient public transportation. In turn, prices for new condos in Toronto are skyrocketing. While perhaps tough to swallow, those looking to buy a new condo in Toronto should be aware that the premium paid for their investment would be worthwhile. Demand for such housing will continue unabated, and values for property located close to public transit consistently rise at a higher-than-average rate. These properties are also more resilient during times of economic downturn. A study conducted by the National Association of Realtors and the American Public Transportation Association concluded “property values with good access to public transit remained much closer to their pre-recession levels than properties without access, even within the same city.”
Property owners who seek to rental income should take particular heed of this trend. Renter demand is especially high in areas within walking distance of public transportation, because they can enjoy the convenience without the substantial commitment that ownership entails. This also includes the short-term rental market for tourists visiting a city’s downtown—AirBnB and VRBO listings consistently yield a higher return when located close to an urban core.
The trend toward urban influx shows no signs of slowing, particularly in cities such as Toronto. Property values are both particularly strong and stable for real estate located close to public transportation, and developers and buyers alike should take this trend into account when making property investment decisions.