Real Estate Watch: Toronto’s 407 Highway Expansion

This article was published in February 2014 in the Toronto Sun. It is reprinted here with permission.

If you’re looking for the right place to make a long-term real estate investment in the Greater Toronto Area, you may want to set your sights east. Soon, the extended 407 will be opening up eastern GTA areas like never before.

East-GTA-407-Extension

Areas like Pickering, Ajax and Whitby will have better access to downtown Toronto.

The 407 Extension Project

As announced back in 2011, the Province of Ontario is planning on extending Highway 407 further east. Towns like Pickering, Whitby, Ajax, Oshawa and Clarington will have easier access to the highway, and the new commuter routes will help alleviate the traffic that plagues the 401.

In addition to extending the 407, the plan also includes two link roads in West Durham and East Durham, between the 401 and the 407. The development will cut commuting times and open the nearby communities to shopping and business areas in downtown Toronto.

The 407 extension promises great opportunities for potential buyers looking for real estate with access to the metropolitan area.

The Increased Popularity of Commuter Towns

Over the years, we have seen plenty of examples of commuter towns growing in popularity. The facilitation of access to downtown Toronto greatly increases the appeal of these areas to potential buyers.

Newmarket and Barrie are prime examples of towns where populations and real estate values have shot up after construction of the 404 and the 400 connected them to Toronto. Between 1991 and 2006, Newmarket’s population grew by 63.4% to 74,295, according to Statistics Canada. Barrie saw similar growth when the 400 was built, as families bought reasonably priced homes and commuted downtown. As a result, average prices have climbed in and around these towns.

Just like Newmarket and Barrie, we can expect towns along the planned 407 extension to see increases in population and home values as the towns become more appealing to commuters.

Getting Ready to Sell?

Hold on a minute! If you’re a homeowner in these areas and think this is an opportunity to make a profit, don’t put up your For Sale sign quite yet!

Studies show that home values in areas that see major infrastructure changes like the 407 extension don’t start increasing until well into construction or even until the project is done. A 2009 study* conducted in Los Angeles looking at the effects of highway construction on real estate prices showed that it wasn’t until the end of construction that they saw any significant rise.

Phase 1 of the 407 project isn’t scheduled to be completed until the end of 2015. If you can wait until the end of 2015 or early 2016, you’ll likely make more from your sale. Increasing demand for homes in these areas, especially Pickering, Ajax and Oshawa, will likely create a seller’s market down the road—barring any unforeseen major downturn in the real estate market, of course.

It is important to remember, though, that home values in the east 905 area are steadily increasing, irrespective of the extended highway. In 2013 alone, the average home price in Oshawa, for instance, increased by 8.71% over 2012. The number of new listings in the town, though, was down 2.36% from 2012.

Buying in the East 905

For buyers, the possibility of steep increases further down the road and the fact that housing prices are already climbing are a good reason to buy sooner rather than later. Despite the inconveniences of noise and construction in the short-term, the long-term benefits of an easier commute to Toronto will only speed up the increase in prices and pump up demand. It could be a wise move to buy now in the east 905.

Whether you’re buying or selling, you can’t go wrong if you keep yourself informed about upcoming infrastructure projects in your area. Projects like sports complexes, commuter rails, highways and more can have a big effect on your real estate investment. Stay up-to-date on major changes in your area and you’ll be able to make the best decision when it comes time to buy or sell.

*Nonlinear Spatial and Temporal Effects of Highway Construction on House Prices by Chernobai, Reibel and Carney.

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Randall Weese

About Randall Weese

Randall Weese is Broker of Record of ComFree Commonsense Network brokerage in Ontario. He has more than ten years’ experience as a consumer advocate and educator in real estate. Follow him on Twitter, GooglePlus, Facebook and Pinterest.

1 comment

  1. Kevin Stokes says:

    I’m so glad that you repeated this information, Randall. As someone close to the end of this extension, it is important to get as much detail as possible on movements that could irrevocably change one’s business, and life.

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