Price Appreciation Patterns around Transit Stations Real Estate Economics 

      

A p r i l   1 6 ,   2 0 1 2  

Maryam Bagheri  10974079

Christina Chan  14424071

Allison Lasocha  47953088

Karlee Sommerfeld  13720073

Nathan Schiff 

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ABSTRACT

The main purpose of this study is to measure the effects of a rapid transit station on housing

appreciation in the surrounding area after different projectmilestones of a rapid transit line.Wehave

measuredtheeffectsonhousingappreciationbeforetheline’sannouncement,confirmationoftheproject,

during construction, and after completion of the Canada Line to findwhen, if ever, price appreciation

becomesapparentforhomesneartransit.

TheCanadaLine isoneofmanyrapidtransit lines inMetroVancouver. Itwasannouncedshortly

afterVancouver’ssuccessfulbidforthe2010WinterOlympicGamestoconnectRichmondCityCentreand

Vancouver International Airport to Downtown Vancouver. However, the controversial project was not

given approval until December 2004. Construction beganmid‐2005 and opened inmid‐2009 to better

thanexpectedridershiplevels.

Inorder toexplore thesequestionsweusedamultiplesalesanalysiswith threedistancerings to

separatehousesthatarenearandnotneartothetransitstations.WechosetofocusonfiveCanadaLine

stations located along the Cambie Corridor: Broadway/City Hall, King Edward, Oakridge/41st Ave,

Langara/49thAve,andMarineDrivestation.Weusedthreeringswith0.5KM,1KMand2KMradiusesto

measurewhetherthereisaneffectofbeingneartothestationatthe0.5KMand1KMdistance,withthe1

to2KMringconsiderednotnear.

Transitpremiumsweresomewhatobservedforhomeswithinthe0.5KMringcomparedtohomesinthe

1KM ring; however, the value was small at around 2.6% overall. When considering 1KM and closer as

“near”and1KMto2KMas“notnear”nodistancepremiumswereobserved.Thismaybeduetotheareasof

studythathavehighvehicledependencyandarerelativelywealthy,andtherefore,arenottargetusersof

rapidtransit,aswellasthelimitationsofthemultiplesalesmethod.

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TABLE OF CONTENTS

ABSTRACT............................................................................................................................................................................................1

TABLEOFCONTENTS........................................................................................................................................................................2

INTRODUCTION..................................................................................................................................................................................3

RAPIDTRANSITINVANCOUVER...................................................................................................................................................4

CANADALINE..................................................................................................................................................................................................................5

AREACHARACTERISTICS.................................................................................................................................................................6

LITERATUREREVIEW:THEORIESANDFINDINGS..................................................................................................................8

METHODOLOGY................................................................................................................................................................................10

REGRESSIONS...............................................................................................................................................................................................................13

RESULTS&INTERPRETATION.....................................................................................................................................................14

ALLSTATIONS–“OVERALL”REGRESSION.............................................................................................................................................................16OVERALLTIMEPERIODTRENDS..............................................................................................................................................................................18INDIVIDUALSTATIONS................................................................................................................................................................................................19Broadway/CityHall...............................................................................................................................................................................................20KingEdwardAvenueStation.............................................................................................................................................................................21OakridgeMall/41stAvenueStation...............................................................................................................................................................21Langara/49thAvenueStation..........................................................................................................................................................................22MarineDriveStation.............................................................................................................................................................................................22

LIMITATIONS.....................................................................................................................................................................................23

PROXIMITYTOEAST‐WESTFEEDERTRANSITROUTES.......................................................................................................................................23CAMBIECORRIDORPLANDENSIFICATION..............................................................................................................................................................23REPEATSALESANALYSIS...........................................................................................................................................................................................24

WORKSCITED...................................................................................................................................................................................25

APPENDICES......................................................................................................................................................................................27

APPENDIXA.................................................................................................................................................................................................................27APPENDIXB.................................................................................................................................................................................................................28APPENDIXC..................................................................................................................................................................................................................29APPENDIXD.................................................................................................................................................................................................................30APPENDIXE..................................................................................................................................................................................................................31

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INTRODUCTION

Ourpaperaddressestwoquestions:1)whetherthereisanappreciationofhousingpricesafterthe

confirmationofa rapid transit station in the immediateareaand2) if there isanappreciation,atwhat

pointittakeseffect.Weexaminedwhetherthereisanincreaseinhousingvalueswiththeexpectationof

rapidtransitcompletionandatwhatpointsthese increasesoccurredovertheyearsarapidtransit line

wasbuilt, aswell as after completion.Our research focusedonVancouver’sCanadaLine:weexamined

housingpricesintheareassurroundingfiveCanadaLinestopslocatedalongtheCambieCorridorwithin

Vancouver.Byanalyzinghousesaleswithina0.5KM,1KMand2KMradiusofeachstopduringdifferent

timeperiodsof thebuildingof theCanadaLine,weare able to seewhether the anticipationof a rapid

transitstopwithinahighlywalkabledistancedemandsanincreaseinhousingvalues.Wealsoanalyzed0‐

1KM and 1‐2KM radiuses to understand how far the effect of transitmay be felt. Using a repeat sales

analysisallowedustocontrolfortheattributesofeachhouseandisolatethepossibleeffectofthetransit

stopannouncement.Thefindingsinthisanalysiscanbeappliedtowardsupcomingproposedtransitlines

in the Greater Vancouver area, such as the proposed UBC extension, proposed additional Canada Line

transitstopsandtheEvergreenLinetoCoquitlamandPortMoody.

Additional questionswe attempt to answerwith our analysis price appreciation trends based on

stationcharacteristicsandifhousingtypehasasignificanteffectonrates.Ouranalysishasallowedusto

estimate the impact of future proposed transit nodes on current housing prices in areas targeted for

Transit‐OrientedDevelopment (TOD). Weare able to apply these forecasts to futureMetroVancouver

transit infrastructure projects and extrapolate the impact of transit additions and expansions. The

constant improvements tourban infrastructureaffecthowpeopleandcompanies locate,whichchanges

how land is valued. Our study benefits professionals in determining the timing and choice of land

acquisitionandhousingproductdevelopment,aswellasindividualsinmakingmoreinformedbuyingor

investmentdecisions.

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RAPID TRANSIT IN VANCOUVER

MetroVancouverhasthreerapidtransitlinesreferredtoastheSkytrain:theExpoLine,Millennium

Line,andCanadaLine,asseenbelow.Inaddition,MetroVancouverofferscommutersrapidbusservices,

ferryservices,andacommutertrain,theWestcoastExpress.TheExpoLinewasthefirstrapidtransitline

constructedintheMetroVancouverservingtheWorld’sFair,Expo86’.TheExpolinehasbeenexpanded

multipletimes,extendingservicestotheCityofSurrey.

TheMillenniumLine,Vancouver’ssecondrapidtransitline,openedin2002servingNorthBurnaby

andEastVancouver.TheMillenniumLinewasoriginallytohaveasecondphaseconnectingtoCoquitlam

CityCentre.Thisphase,knownas theEvergreenLine,waspostponeddue toachange in theprovincial

governmentbutisnowscheduledtoopenbymid‐2016.Thisexpansionwillcostanestimated$1.4billion

(MinistryofTransportationandInfrastructure,2011).TheCanadaLine,whichopenedinAugustof2009,

isVancouver’snewest rapid transit line, connectingRichmondand theVancouver InternationalAirport

(YVR)toDowntownVancouver.Anotherexpansion,theUBCLine/BroadwayCorridorextension,isinits

planningstagestoconnecttheExpoLinewiththeUniversityofBritishColumbia.Thisexpansionisstill

beingconsideredandwouldreplaceTranslink’sbusiestbusroutesalongBroadwaywhereover100,000

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tripsaremadedaily.Thisproposedlineisestimatedtocost$2.8billionandtoopenby2020(Ministryof

Transportation,2008).

CanadaLine

Inthisresearchpaper,ourhypothesiswillbefocusingontheeffectsoftheCanadaLineonsurround

house values. The Canada Linewas originally referred to as the Richmond‐Airport‐Vancouver Line or

RAV Line as it connects these threemajor points of transit. The linewas originally proposed in 2003,

shortly after Vancouver’s successful bid to host the 2010WinterOlympics. However, the 19.2 KM line

remainedinjeopardyasproponentsarguedagainstitsproposedcost,$1.7billion,anditspublic‐private

partnership plan (Mickelburgh, 2003). In June 2004 the provincial government agreed to take

responsibility for the project and assume financial risks, putting the project back on track (Armstrong,

2004). In December 2004, regional politicians voted 8‐4 for the project to proceed, setting the

controversialprojectinmotion(Mickleburgh,2004).

The Canada Line officially opened on August 17th, 2009, on budget and three and a halfmonths

aheadofschedule.Sincethen,ridershiphascontinuouslyexceededprojectedtargets.Translinkoriginally

projected the break‐even ridership to occur by 2014 at 100,000 passengers per day. However, by late

2010thelinehadreachedthisprojectedridership,threeyearsearly(Stuek,2011).Inadditiontogreater

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thanexpectedridership, theCanadaLinehasdriven increaseddensificationalong theCambieCorridor,

where themajority of the stopsareplaced. InMay2011, theVancouverCityCouncil approveddensity

changesthataddasmanyas14,000people,betweenKingEdwardAvenuetoMarineDrive,inthenext30

yearsanditseffectsarealreadybeingfelt(Lee,2011).

AREA CHARACTERISTICS

The area surrounding the Cambie Corridor is composed ofmostly single‐family homeswith high

averagehousingvalues relative to the restofVancouver (seeAppendixA). Theareas surroundingour

fourchosenstops:Broadway/CityHall,KingEdward,Oakridge/41st.Langara/49th,andMarineDrive,also

haverelativelyhighaveragehousingvalues,withtheexceptionoftheBroadway/CityHallstopthathas

lowervaluesbutisofmuchhigherdensity.

EachareasurroundingaCanadaLinestationcarriesuniquecharacteristicsofferingdiversefeatures

toservicethepublic.DevelopmentssurroundingBroadway/CityHallareprimarilynewerandoldermid‐

to high‐risemixed‐use developments. Street‐level commercial and higher‐level offices file along main

arterialroadsandofthestationsstudieditholdsthehighestconcentrationofurbanuseanddensity;the

areacollectstrongtrafficflowsduetotheproximityofhighlyfrequentedlocationssuchasCityHalland

VancouverGeneralHospital.AstheCanadaLinetravelssouth,theareahasanactivepedestrianflowwith

low‐rise commercial and small stripmalls running alongCambie Street andwith lowdensitydetached

residentialandsingle familyhomes intheproximatearea. Oakridge/41ststation’shighlighting factor is

Oakridgemall,whichprovides citywideand local serving shopsandservices. Theareamainlyhouses

singlefamilyhomesandnumerousschoolsandparks,whilethearterialroadsarebusycommuterroutes.

Only nine blocks south is the Langara/49th station, primarily servicing the stream of college students

attending nearby Langara College. The area has a popular golf course nearby, housing consists of low

density residential units,mainlydetachedhousingwith some low‐rise attacheddwellings. TheMarine

Drive area is currently undergoing high density development; however the area is still predominately

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industrialandbigboxcommercialretailers,whiletothenorthofMarineDrivethereissomelow‐density

housing.

Thenumberandaveragevalueofhouseholds,andtheaverage incomepercapitaof those located

withina1KMbufferzoneofeachtransitstations,isshownbelow.

Figure1|AverageAreaValueswith1KMBuffer

TransitStationsAverageHousingValues

NumberofPrivateHouseholds

AverageIncomeperCapita

Broadway/CityHall $426,567 462 $40,327KingEdward $680,365 197 $35,516Oakridge/41stAve $757,608 220 $32,558Langara/49thAve $700,455 241 $36,474MarineDrive $577,789 194 $28,829*Basedon2005data

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LITERATURE REVIEW: THEORIES AND FINDINGS

Giventheassumptionsthatrapidtransitimprovesaccessibility,andreducestraveltimeandtravel

costs for the neighbourhoods near the transit stations, we expect higher house price appreciation for

propertiesthatarelocatedclosetotransitlines.Furthermore,improvedaccessibilityandpedestrianflow

would make rail transit stations more attractive for commercial uses, amenities, and higher density,

transit‐orienteddevelopments.Thisinturnwouldcreatemorevibrantneighbourhoods,whichmayalso

contribute to increased house price appreciation. We have formulated our hypothesis based on past

literaturethatwewillsummarizebelow,aswellastheaforementionedreasons.

There have been several studies that have examined the effect of rapid transit on residential

housingvalues.AlthoughnoneofthesecasestudieshavefocusedspecificallyontheCanadaLine,theyare

nonethelessrelevantandhaveassistedusinformingourhypothesis.Theresultsfromthesestudieshave

varied depending on several influences that each study has controlled for. For instance, many have

comparedpriceappreciationtothemedianincomesoftheimmediateareassurroundingthestationsand

have found this to be an important factor in determining which stations will observe higher price

appreciation. Additionally, some have considered “net benefit” effects, accounting for factors thatmay

increaseaswellasdecreasepropertyvalues.

However,somestudieshaveobserved lowervalues forresidentialproperties locatednear transit

stations.AnexampleofthisisastudyconductedbyCerveroandDuncanwheretheyexaminedtheland

valueimpactsofrailtransitinLosAngelesCounty(Cervero&Duncan,2002).Theauthorsmentionedthat

one explanation for this may have been that many major transit stops in the County lie within

redevelopmentdistricts.Thisshowsthateverystudyisuniqueandthattheremaybenumerousfactorsin

additiontotransitstationproximitythatmayaffecthouseprices.

Anegativeimpactonhouseprices,however,hasbeenlesscommon.Areportpublishedin2010by

theRealEstateInvestmentNetworkinCalgaryexaminedtheimpactoftransportationimprovementson

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housingvalues inCalgary, and inadditioncreateda synopsisofpublishedworks thathave studied the

topic(seeAppendixB).Thistablefurthersolidifiesourexpectationthatpriceappreciationwillbehigher

for homes that are located closer to Canada Line stations. Although the results have been mixed, the

majorityofpaststudieshave foundthat there isapositiveeffectonhousevalues, though thisvaries in

termsofmagnitude.

As Bowes and Ihlanfeldt have discussed in their study, themixed resultsmay have been due to

“simultaneousandcompetingeffectsofrailstationsonnearbyproperties”(Bowes&Ihlanfeldt,2001).To

account for this, they went beyond the simple effect of proximity and looked at four factors

simultaneously and separately, two of which have positive effects and two that have negative effects.

Positive factors include the access advantage due to shorter, less stressful commutes, and the indirect

externalityofincreasedcommercialservicesthatlocateneartransitstations.Negativefactorsincludethe

directeffectoftheincreaseinnoise,pollutionandgeneralunsightlinessofthestations,inadditiontothe

indirecteffectofheightenedcrimeduetoimprovedaccesstothearea.Theauthorsfoundthatallfourof

these factors played significant roles in the connection between property values and rail stations.

However,theirsignificancevarieddependingonthedistanceoftheneighbourhoodfromtheCBD,andthe

medianincomeoftheneighbourhood.Ourstudydidnottakea“netbenefit”approach.Rather,ourpaper

differsfromseveralpaststudiesinthat,inadditiontolookingattheeffectofproximitytotransitstations,

we also look into the difference in price appreciation at different time intervals, and also compare the

resultsofdifferentstations.

McMillenandMcDonaldtookanapproachsimilartoours, in thattheystudiedtheeffectofanew

transit line inChicagoonsingle‐familyhousepricesbeforeandafter theopeningof the line,usingdata

overa17yeartimeperiodtoseehowpricesvariedovertime(McMillen&McDonald,2004).Theirresults

showedthatalthoughthelinewasnotcompleteduntil1993,housepriceswerebeingaffectedasearlyas

1987, when the plans became known. Generally, the authors found that appreciation rates were

approximately6.89%higherbetween1986and1999 thancomparablehomes farther from thenearest

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transitstation.Althoughthisapproachissimilarduetothefactthatitlooksforpriceappreciationcaused

bytheanticipationof thetransit line,wehavedecomposedthedata furthertobefore,during,andafter

construction,inadditiontobytransitstationtoseewhichareaand/ortimeintervalwasmostimpacted

bytheCanadaLine.

PerhapstheclosestcasestudycomparisonisonethatwasconductedbyFergusonin1984,where

he studied the impact of Vancouver’s first Advanced LightRail Transit, the Expo Line, on single‐family

propertyvaluesbefore the transit systemwas inoperation(Ferguson,1984).Fergusondiscovered that

themarketinVancouverwasreactingtothetransitsystemapproximatelytwoandahalfyearspriorto

thecompletionofthetransit line,showingevidenceofspeculationinthemarket’sexpectationof future

gains.

In terms ofmethodology, several studies used hedonic regressionmodels to look at the general

housepriceappreciationcontrolledforthosenearandnotneartransitstations.However,sinceourstudy

examinestheeffectofspecificevents,wehaveusedtherepeatsalesanalysistolookatpricechangesfor

thesamehousebeforeandaftercertainevents,thuscontrollingforthephysicalcharacteristicsthatmay

affecthousingpricedifferences.Wewillexpandonourmethodologyinthefollowingsectionofthispaper.

METHODOLOGY

Ourstudyusedrepeatsalesanalysisandln‐specificationregressiontodeterminethelevelofprice

appreciation inhomesnearCanadaLinerapid transit stationsbeforeandaftercertainevents.A repeat

sales method was appropriate for our study because it required much less data regarding the

characteristics of each transaction and allowed us to control for other factors thatmay affect housing

prices. By looking at the transaction of the same property over a certain period of time,we no longer

required the specific characteristics of the house, assuming that these characteristics remained stable.

ThedataweusedwasextractedfromtheRealEstateBoardofGreaterVancouver’sMLSdatabase,called

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MLS Link. We were able to find data for houses sold between 2000 and 2012. This time period was

sufficientforourstudybecauseitcoveredthetimebeforetheCanadaLineannouncement,confirmationof

theproject,duringconstruction,adpost‐construction.

WechoseBroadway/CityHall,KingEdward,Oakridge/41stAve,Langara/49thandMarineDrivefor

their Vancouver location. We excluded Downtown and Richmond due to their different natures and

dynamics,aswellastofocusourscopeofanalysis.TheOlympicVillagewasexcludedduetothelackof

repeatsalesdata,astheareaistransitioningfromindustriallandswithafocusonpre‐saleproductsand

anyrepeatswerealreadypartoftheBroadway/CityHallarea.

Research conducted by the Planning Committee of Fairfax Country, Virginia regarding walking

distancesforTransitOrientedDevelopmentsdeterminedthatdistanceswithin500metresareconsidered

highlywalk‐able,while 500 to 800metres is considered to be an acceptablewalking distance (Fairfax

County,2006).Theirresearchshowedthatupto0.25miles(402metres) isgenerallydefinedaswithin

walkingdistance,buthighlightedthat forrail transitstationsandresidentialuses,peoplearewilling to

walkupto0.5miles(805metres).Comparing1KM,aswasdefinedbyourdataset,toalargerringof2KM

allowedusencompassallthewalkabilityaroundastationupto10minutes.However,asa0.5KMradius

isconsideredmostwalk‐able,wewerecurioustofindoutiftherewasasignificantdifferencebetweenthe

0.5KMringsandthe1KMrings.Consequently,weorganizedourdatatolookattwosetsofcomparisons:

1| SmallSet:ComparisonofhomeswhereNear=a0.5KMringaroundastationandNotNear

=a0.5KM‐1KMringaroundastation.Thisallowedustocompleteasmaller‐scaleanalysisto

determinepremiumsassociatedwithhighly‐walkabledistances.

2| LargeSet:ComparisonofhomeswhereNear=a1KMringaroundastationandNotNear=

a1KM‐2KMringaroundastation.

Each observation (a unique address) was assigned a "1" to whichever categories they fell into:

station, proximity, and attachedness,where detached is a single family home and attached includes all

multi‐familyhomevarieties.Thisallowedustoexecuteper‐stationanalysestocontrolforandunderstand

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theimpactthattransitstationshaveonareaswithdifferinglevelsandtypesofrealestatedevelopment,

basedonourunderstandingofeachstation'sareacharacteristicsandtheregressionresults.

WeusedMicrosoftExcel to categorize eachobservationaccording to the station itwas closest to

andhowclose.Ifanobservationappearedinmorethanonestationarea,theobservationwas'given'to

thesmallestproximityasthehomelikelyenjoysthecloserproximity‐ forexample,anobservationthat

showedupinthe1KMringofonestationandthe0.5KMringofanotherwasgiventothe0.5category.

Homeswithinthesameproximityringweremergedandassignedavalueof1forbothstations.Wealso

identifiedwhethertheobservationwasanattachedhomeornottocontrolforthepossibledifferencein

priceappreciationpatternsforthetwoproducttypes.

Thenextstepinvolvedusingdatawithinourspecifiedringsandsortingthemintosixtimeperiods

basedonthefollowingkeydates:

1| Confirmation:January1,2005.ActualconfirmationwasinDecember2004,butforsimplicity

insortingthedata,welookedatbeforeandafterJanuary1,2005.

2| Construction: January 1, 2006. Actual construction began in September 2005. However,

construction may not have been disruptive at this point, and the colder season may have

reducedopen‐air,disruptiveconstruction.Tocontrolfornegativeeffectsofconstructionand

tomakesortingthedatasimpler,wesetthisdatetoJanuary1,2006.

3| Post Construction/Operation: January 1, 2009. Substantial completion occurred in early

2009.Atthispoint,heavy,nuisance‐causingconstructionwascompleted.

Thedatesnotedabovecreatedthefollowingdummyvariabletimeperiods:

TimePeriod Description DateRangeBeforeConf(Near/Far) Bothsalesoccurredbeforeconfirmationof

theCanadaLineBeforeJanuary1,2005

StraddleConf(Near/Far) FirstsaleoccurredbeforeconfirmationoftheCanadaLine.Subsequentsaleoccurredafterconfirmation,includingduringconstruction,butbeforecompletion.

From 2000‐2004, andfrom 2005‐2008,inclusive

Constr(Near/Far) Bothsalesoccurredduringconstruction. 2006‐2008,inclusiveBefAfConstr(Near/Far) Firstsaleoccurred anytime before

constructionbegan;subsequentsaleBefore2005,andin2009orlater

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occurredaftercompletion.StraddleOp(Far/Near) Firstsaleoccurred duringconstruction,

subsequentsaleaftertheCanadaLinewentintooperation

In 2006‐2008, and in2009orlater

AfterOp(Near/Far) BothsalesoccurredaftertheCanadalinewentintooperation

2009orlater

Bycreating thesetimeperiods,wewereable to trackwhathappenedtohouseprices indifferent

scenarios throughout the development of the Canada line. "Before Confirmation" can be viewed as a

controltoshowthegeneralrateofpriceappreciationbeforerapidtransitbecameacertainty.Assigninga

dummyvariable foreachtimeperiodandwhetherthehomewasnearor farprovideduswithabsolute

certainty that the TimePeriods*Near/Far categories, a series of quasi‐interaction variable, were fully

utilized.Thisformatalsoallowedustopresenttimetrenddatamoreeasily.Aftersorting,wenotedthat

thenumberofobservationsfornearandnot‐nearsalespairswasfairlyevenlydistributedthroughout.

Regressions

RegressionswereperformedinStata10andincludedan“Overall”regressionwhichcomprisedall

observationswithin a set, aswell as “Per‐Station” regressions to observehowparticular stationswere

affecteddifferentlybytheeventsoftheCanadaLinedevelopment.Ourfinalregressiontooktheformof:

ln(Pi,b‐Pi,a)=β0+β1‐6(timeperiod_near)+β7‐12(timeperiod_far)+β13(attached)+β18(attachedxnear)+ε

wherePisthepricesofpropertyiwhensoldinperiodaandperiodb.β0isanambiguousconstantthatis

detached, but has no specific nearness, time period or station area (as in the “Overall” regression).β1‐

6(timeperiod_near)denotes thesixnear timeperioddummyvariablesandβ7‐12(timeperiod_far)does the

same for observations not near a transit station. β13(attached) and β18(attachedxnear) are dummy

variablesforattachednessandattachedhomesnearthestationrespectively.Additionaldummyvariables

forstationswereusedinthe“Overall”regression.

Interpretation of these regressions included reading the rate of price appreciation for each time

periodandthentestingwhetherthemeansbetweennearandfarweresignificantlydifferent.Weusedthe

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testx1=x2command(Waldtest)anddeterminedthatifProb>Fwaslessthan0.05,thenthemeanswere

significantlydifferentatthe95%level.Wetooketothepowerofthedifferencebetweenthenearandfar

meansasanestimateofthedifferenceinpriceappreciationratesofnearandfarhomes.

Initially,wehadplannedtoincludedummyvariablesforeachyearfrom2000‐2012,whichseemed

idealtocontrolforunusualyearsofappreciation.However,werealizedthishadlimitedmodelingpower

forus,aseachpricedifferencevalueisassignedtoasinglesalespairandtotrackyear‐by‐yearaverages

from across all sales pairs was beyond our scope and tools at the time. Instead, we focused on the

significanceofnearnessduringparticulartimeperiods.

RESULTS & INTERPRETATION

WefoundevidenceoftransitpremiumsfornearhomesmoreoftenintheSmallSet,wherehomes

within500metersofCanadaLinetransitstations inVancouverwereconsiderednear.However,notall

stationsexperiencedpositiveorsignificanttransiteffects.TheLargeSetpresentedseeminglyconflicting,

significantly negative transit reductions in comparison. Attached homes significantly reduced

appreciation rates inboth theSmall andLarge sets. In contrast, somehomeswhichwereattachedand

near (AttachedxNear) in existing high‐density, transit‐oriented areas showed significant positive

appreciation inLargeSetresults,while in theSmallSet,allsmallpositiveeffectswere insignificant.We

believethisishighlycorrelatedtoareacharacteristicsandthesupplyofattachedhomes.Fortheformer,

areas already highly developed relative to the other stations seemed to show little or negative price

appreciationcomparedtotheirnon‐nearcounterparts.Stationareasbelievedtohavehighdevelopment

potential,suchasKingEdwardandMarineDriveStation,postedparticularlyhighpremiums.Thiseffect

maybeexplainedbytheexpectedbenefitofconnectingtheseotherwisehighlyvehicle‐reliant,residential

areas to rapid transit, as they present an opportunity for higher‐density, mixed‐use development and

general improvement to create pedestrian‐friendly, transit‐oriented neighbourhoods. As such, both

owner‐occupiers and developers may be willing to buy homes and land at a premium for the future

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opportunity of an improved neighbourhood or for development, respectively. For the latter, a possible

explanation is that attached homes are increasing in supply, while detached homes are decreasing,

resultinginlowerpriceappreciationforattachedhomes.Nevertheless,existingstocksofattachedhomes

nearstationsarevaluedmorehighlythannon‐nearattachedhomes,whichisaresultweexpected.

TheLargeandSmallSets’conflictingresultsmaybeexplainedbyafewfactors:

1| TheSmall Set’snon‐nearhomesare still affectedby transitproximity, such that theoverall

differencebetweennearandnon‐nearisinsignificant;conversely,theLargeset’s1‐kilometre

ringcapturesallpositiveeffectsoftransitproximitycomparedtonon‐nearcounterparts.

2| The Large Set’s 2‐kilometre rings reach intomultiple Vancouver neighbourhoods, many of

which currently comprise, for the most part, detached single family homes (higher

appreciationrates)orareservicedbyothermajorfeederrouteswhichhavetheirowntransit

oraccessibilitypremiums.

3| In some predominantly residential areas, attached homes are low‐density types such as

townhomes, duplexes, and low‐density apartment complexes. Consequently, there may be

littledifferenceinnearhomesthatareattachedthannotattached,orattachedandnotnear,

comparedtothesignificantdifferencesseenaroundstationssuchasBroadwayandOakridge.

Low‐densityattachedhomesaremorelikelytobetargetedforhigher‐densityredevelopment

near stations, such that transit premiums may become more apparent only after an area

completesthebulkofitschanges.

AsithasonlybeenacoupleofyearssincethecompletionoftheCanadaLine,Vancouverrequiresmore

transitiontimebeforeitconsistentlyshowsapatternoftransitpremiums,ifany,inrepeatsalesdata.

Our resultsalso show thatVancouver experienced clearprice appreciation trends specific to each time

period during the development of the Canada Line, with higher appreciation rates at the time of

confirmationandatcompletionoftheCanadaLine.Wecanattributetheoverallincreasestothepositive

expectationofanewrapidtransitlinetoVancouverandthebenefitsitwillprovidethroughoutthecity,

ratherthanjustareasnearthestations.RegressionoutputscanbefoundinAppendixE.

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AllStations–“Overall”Regression

Basedontestingthesignificanceofthedifferenceofmeansforeachtimeperiodpair,wefoundtime

periodswithsignificantpriceappreciationratesforhomesnearastationineachset,asfollows:

TimePeriod Observation

Estimated premium/discount for near homes, based on e^(themeandifferenceofcoefficients).

SmallSetBeforeandAfterConstruction 7.23%transitpremiumDuringandAfterConstruction 4.85%transitpremiumLargeSet BeforeConfirmation ‐3.78%reductionDuringConstruction ‐5.35%reductionBeforeandAfterConstruction ‐9.48%reductionDuringandAfterConstruction ‐4.11%reduction

Stations were generally not significant at the 95% level in determining price appreciation

differences,whichwe expected, but tested for on the off‐chance that a fewwould be. Small Set's 41st

Avenue Station and Large Set’sMarineDrive Stationwere significant, reducing price appreciation by ‐

3.0%and‐4.2%respectively.

Nextpage:OverallResults

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Throughout our analysis, we found that attached homes experienced significantly lower price

appreciationatalltimes,rangingfrom‐7.9%to‐3.1%intheSmallSetand‐14.2%to‐4.2%intheLarge

Set.Within individualstationareas,attachedhomes in theLargeSetreducedoverallpriceappreciation

morethanthoseintheSmallSet(i.e.attachedhomesclosertostationsappreciatedmore,butstillreduced

the overall appreciation rate), with some stations in the Small Set showing almost half the decreasing

effectofattachedhomesthantheirLargeSetcounterparts.ApossibleexplanationisthattheLargeSet’s

not‐near rings encompass more areas with single family homes, which appreciate higher as attached

homesincreaseinsupplyovertime.

OverallTimePeriodTrends

Ourtimeperiodregressionsshowanoverallpriceappreciationpatternforhomesboughtandsold

atspecificpointsalongtheCanadaLinedevelopmenttimeline.Resultsindicategreat increasesinprices

upontheconfirmationoftheCanadaLine,asexpectedofpositivenews.Thejumpinappreciationratesis

regardless of nearness to a station,

which shows the expectation of the

positive benefits the Canada Line will

provide the city overall. This is in

contrast to the notably lower

appreciation rates for homes near a

plannedstationduringtheconstruction

period,whichcanbeattributedtothenuisanceofconstructionhappeningcloseby.

Before/After Construction shows the highest appreciation rates. This is likely due to both the

passageoftime‐‐asthistimeperiodcomprisesthemostnumberofyears‐‐andsellingagainonlywhen

theCanadaLineiscomplete.TimeperiodsaftertheconfirmationoftheCanadaLinegenerallyfellbackin

line with the appreciation rates of past periods, but with some evidence of an upward, downward or

steadytrenduniquetothestation.

19

IndividualStations

Based on the characteristics of each station's immediate area, it seems that homes near stations

withrelativelyhigherlevelsofpre‐existingnon‐residentialdevelopmentandmajortransitconnectionsat

thetimetheCanadaLinewasconfirmedmetwiththeleastamountofsignificantrapid‐transit‐basedprice

appreciation.Forexample,BroadwayCityHallexperiencedlimitedorreducedpriceappreciationinboth

the Small Set andLarge Set ring comparisons. In contrast, stationswith primarily single‐family homes,

low‐density zoning or limited commercial amenities, but with the opportunity for development and

revitalization, resulted in thehighest levelsof transitpremiums: inparticular,KingEdward'sestimated

transitpremiumwhenthestationcompletedwas49.56%forhomeswithin0.5KMof thestation,while

homeswithin0.5KMofMarineDriveStationsawa45.09%transitpremium.Attachedhomescontinued

topostlowerappreciationratesacrossallstationsandsetsizes.However,onlythestationswithahistory

ofhigher‐densitydevelopment showed significantprice appreciation for attachedhomesnear a station

(LargeSet):Broadwaywith2.39%andOakridgeat8.20%.

The rate of price appreciation followed the general trend as described above: a sudden increase

uponconfirmation,asharpdecreaseduringconstructionthat isoftenbelowpre‐confirmationratesand

much lower for thosenear than far, and an increasewhen construction completes. Whether the post‐

completion price appreciation rate exceeded the pre‐confirmation rate ormaintained a premium over

non‐nearcounterpartswasuniquetothestationandremainedambiguousoverall.

Thefollowingselectedgraphsshowtherelativepriceappreciationrateco‐efficientsbytimeperiod

fortwocontrastingstations:41stAvenue,wherethereisnosignificantevidenceofatransitpremium,and

MarineDriveStation.

20

The variance between each station's price appreciation patterns seems to contribute to the

ambiguityofwhetherornotatransitpremiumexistsoverall.

The following is a summary of each station's highlights, alongwith possible contributing factors

basedonareacharacteristicsforcertainpriceappreciationobservations.Observationsareforhomesnear

stationsandarecalculatedbyraisingebythedifferencebetweenthenearandnon‐nearcoefficients.

Broadway/CityHallBroadway/CityHall ObservationSmallSetBeforeandAfterConstruction 4.18%transitpremiumLargeSet BeforeandAfterConfirmation ‐3.34%reductionBeforeandAfterConstruction ‐10.96%reductionDuringandAfterConstruction ‐3.82%reduction

Highlights

‐ The Large Set’s AttachedxNear is significant and positive at2.39%.‐Posted largestpriceappreciationratedropof all stations forDuring Construction from the previous time period(Before/AfterConfirmation).‐ During/After and After Completion time periods showuniformlylesspriceappreciationthanBeforeConfirmation.

PossibleFactor(s)

‐ Broadway has always been highly connected by major busroutes.‐High levelsofexistingcommercialandgovernmentbuildingsandamixofnewandoldresidentialdevelopments.‐ Discount/reduction may be due to the existing prominenceand gradual increase of attached homes (including convertedsinglefamily)intheimmediatearea.

21

KingEdwardAvenueStationKingEdwardAvenue ObservationofpriceappreciationSmallSetBeforeandAfterConstruction 49.56 %transitpremiumDuringandAfterConstruction 23.14%transitpremiumLargeSet BeforeandAfterConstruction: ‐22.19%reduction

PatternHighlights‐Smallset:Whilenotallthenearvariablesaresignificantatthe95% level, the area shows a distinct transit proximity trendthroughout.

PossibleFactor(s)

‐Premiumsduetolandusechangeopportunities:existingareais primarily low‐rise/low‐density residential, previously withlimited connections and few non‐residentialfeatures/amenities.‐LargeSetreduction:Sincethereisalargetransitpremiumforhomeswithin500mofastation,thereis less impactwhenthe0.5KMringismergedwiththe1KMringfortheLargeSet.

OakridgeMall/41stAvenueStationOakridgeMall/41stAvenue ObservationLargeSet BeforeandAfterConfirmation ‐11.92%reductionBeforeandAfterConstruction: ‐18.78%reductionDuringandAfterConstruction ‐24.77%reduction

Highlights

‐ Near is completely insignificant for the Small Set: smallestlevelsofestimatednear/fardifferencesofallstations foreachtimeperiodpair.‐ Posted highest reduction numbers for Attached in both theSmall and Large Set of all stations: ‐7.29% and 14.24%respectively.‐ AttachedxNear is significant in the Large Set, showing an8.20%premium.

PossibleFactor(s)

‐ Oakridge/41st has large stock of existing commercial (mall,undergoing upgrades), a relatively even gradient of attachedhomes and smaller single families across the 1KM ring, andconnectionstoavarietyofarterialroadsandbusroutes.

22

Langara/49thAvenueStationLangara/49thAvenue ObservationofpriceappreciationSmallSetBeforeandAfterConstruction ‐25.16%reductionAfterCompletion ‐16.19%reductionLargeSet BeforeandAfterConfirmation 12.87%transitpremium

Highlights

‐ Is the only station whose nearness at 500m consistentlyand/or significantly reduces appreciation rates across alltimeperiods.‐ Considerably higher post‐completion appreciation ratesthanBeforeConfirmationrate.

PossibleFactor(s)

‐ Area has Langara college, golf course, low‐densityresidences; otherwise limited pedestrian and otherdestinationactivities.Opportunityforrevitalization.‐ Near reduction: Possibly related to perceptions of areademographics and therefore what house type and features“ought to be” there and who is interested in the area. e.g.student/faculty‐based. The 1KM ring likely resolves thedownside of being too close to the station, whatever itprovestobe.

MarineDriveStationMarineDrive(SW) ObservationSmallSetBeforeandAfterConstruction 16.17%transitpremiumDuringandAfterConstruction 18.58%transitpremiumAfterCompletion 45.09%transitpremiumLargeSet BeforeandAfterConstruction ‐8.14%reduction

Highlights‐Smallsetshowspotentialforsustainedhighgrowthfor thenearfuture:theestimatedpremiumsincreasedovertime

PossibleFactor(s)

‐ Marine Drive was primarily industrial with some low‐densityhousing forms to thenorthand limitedpedestrian‐relatedcommercialactivitydespitetheSouthBusLoop.‐LargeSet:2KMringreaches intoestablishedsingle‐familyneighbourhoods,andthehigh‐premium500mring loses itsproximityeffectwhenmergedwiththe1KMring.‐MarineDrivehasbeenafocalpointintheCambieCorridorPlanwithmanyplansforhigh‐densitydevelopmentlandusechangesandrevitalizationinplace.

23

LIMITATIONS

Thereareseveraluncontrollablefactorsbindingourstudy,whichmayhaveaffecteddata,analysis,

andouroutcome.Threeprimarylimitationsaredetailedbelow:

ProximitytoEast‐WestFeederTransitRoutes

TheCanadaLinerunsnorth‐to‐southalongCambieStreetinVancouver.Inourstudy,anumberof

our analyzed transit nodes intersect with major bus routes connecting Vancouver from east to west.

These feeder transit routesmay be influencinghousingprice appreciation. For example, the 99B‐line

runsalongBroadwayAvenueand isNorthAmerica’sbusiestbus route carrying50,000passengersper

day(Dobrovolny,2010). Additionalexpressbusroutes includethe84, travelingalongWest4thAvenue

andthe43,whichoperatesduringmorningandeveningpeakrushhourcommutingtimeson41stAvenue.

CambieCorridorPlanDensification

OnMay9,2011,Vancouver’sCityCounciladoptedtheCambieCorridorPlan.Thisstudydesignates

futurelandusealongCambieStreetfrom16thAvenuesouthtotheFraserRiver(VancouverCorridorPlan,

2011).ThestudyshowstheCity’splantoincreasedensitywithin800m(10minutewalk)aroundexisting

Canada Line Transit Stations and proposed stations at 33rd and 57th in Vancouver (see Appendix D).

Although it appears the approval of the Cambie Corridor Plan would only affect 2011 data analysis,

speculation leading up to the Plan’s approval may have skewed sales prices and number of sales.

However, this potential appreciation due to densification can be attributed to the Canada Line, and

thereforeshouldbeincludedinouranalysisontheeffectoftheCanadaLine.Aspertheresearchinthe

‘ImpactsofRailTransitonPropertyValues’,railtransitmayincreasepropertyvaluesincloseproximityto

stationsforpotentialdevelopment.Existinglowdensityusecanbeconvertedtohigherdensity;however,

such changes are highly dependent on local jurisdictions perspectives on development growth (Diaz,

1999).

24

RepeatSalesAnalysis

Therepeatsalesmethodobviatesinformationassociatedwiththeheterogeneousnatureofhousing;

it simply measures the price change of the same housing unit over time (Guntermann & Taylor,

2009). While a hedonic regression analysis includes a value for each housing attribute such as size,

location, and number of bedrooms, a repeat sales analysis assumes the house maintains the same

attributesovertime.Therefore,ifahousehasbeenrenovatedbetweentherepeatedsales,thiswouldnot

be reflected in the repeat sales method. In addition, any improvement to the neighbourhood, such as

increasedamenities,thatoccurredbetweentherepeatsalesdatescouldappreciatethehousingvaluesin

thearea.Usingtherepeat‐salesmethod,thisappreciationwouldnotbeattributedtoincreasedamenities

asthemethodassumesallthehousingattributesremainthesame,includinglocationfactors.Therefore,

thiscouldartificiallyattributeanincreaseinhousingpricesduetotheCanadaLine.

   

25

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APPENDICES

 AppendixA

  

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AppendixB

 

       

29

AppendixC

    

30

AppendixD

  

    

31

AppendixE

32

33