It’s often said that the biggest financial investment a person will ever make is buying a home. Why? Because, in addition to wielding a hefty price tag, a home is one of the few things you can buy whose value is likely to actually increase with the passage of time.
Likely to — but not necessarily. If you think you’ll eventually want to sell your home, there are a handful of factors to be wary of when you’re buying, that could potentially impact its value — and not in a positive way.
Today, we’ll talk about one of those factors: location.
How much does location matter? Maybe more than you think, according to Ryerson University professor Murtaza Haider, who says that two houses built in two different locations, but that are otherwise completely identical in size, layout, and composition, could sell for pretty different prices.
So, what locations should you try to steer clear of if you plan to sell in the future?
Below, we ask Haider, whose research looks at the correlation between location and housing prices in the Greater Toronto Area. We also talk to Aaron Luftspring, a sales rep at Toronto-based brokerage Barry Cohen Homes, and Shawn Stillman, a broker at Mortgage Outlet, about what buyers should look out for.
Highways, and other “busy streets”
Haider and Luftspring were both emphatic about this point: busy streets with heavy car traffic are not great for real estate value. The problem lies mostly in the noise — car traffic is rarely, if ever, serene — but it’s also about what’s usually absent when big roads are present: green space. And, if there’s another thing that Haider and Luftspring agree on, it’s that a home with access to green space — lawns, parks — will probably command a higher premium than a home without it.
That being said, not all streets are made equal. If your home is close to a commercial street with heavy foot traffic, that could definitely be a good thing.
“Let’s just say you were a block away from Yonge Street,” says Luftspring, referring to one of Toronto’s main commercial roads, “where you’ve got phenomenal shops. You don’t need to get into your car to grab groceries or go for a stroll to the nearest Starbucks or Second Cup. That would increase the value of your home.”
Luftspring adds that different home types will be impacted by busy roads in different ways. “It’s... accepted in general to have more of a city feel when you’re living in a condo right on a busy street. But when you’re a residential, detached home, it tends to have a negative connotation.”
Gas stations, railroad tracks, hydro towers, power stations, and industrial areas — proximity to any of these things definitely won’t help improve your home value, since they can generate and/or attract odors or other substances that could affect your air quality.
Power lines are also up there — even though there’s no evidence that they impact human health, says Haider, who found that homes close to power lines tend to sell for six to ten per cent less than other properties.
“People mistakenly believe that power lines cause cancer. There’s no proof for it, but people still believe it,” he says. “Also, nobody wants to look at the wires and big towers behind their houses. So visually, it’s unappealing, and then people have health scares.”
And it’s not because of the ghosts. As with the power lines, cemeteries are unpopular amongst homebuyers purely because they’re not visually appealing.
“Nobody likes to look at graves,” Haider says.
These are all general rules to go buy, but everything always comes down to the specific market that you’re shopping in, says Stillman, who works with Toronto homebuyers.
In tight markets like Toronto’s and Vancouver’s, location does make a difference — but perhaps to a lesser extent than it would in say, Calgary or Halifax. “Housing is in such short supply,” says Stillman. “Stuff will still sell. It’ll just sell for slightly less.”
For example, he says, “there’s a gas station at Lawrence and Don Mills. And within 500 feet of that there are houses that are worth $5 million.”
“It’s tough to paint everything by the same brush.”