What Is the Impact of a New Metro Station on Housing Prices?

Recently I was speaking with a women who had inherited a Reston condo from her mother. The condo was in a high rise very close to the soon to open Silver Line Metro stop at the Reston Town Center. She was trying to decide whether she should sell the home now or rent it and sell once the Metro opened. She had no immediate need for the proceeds and could sell now or wait. Which was the best she asked?

I thought I knew the answer but rather than go with my gut, I told her I would research the issue. I thought I could find enough data to give us a fairly definitive answer. I decide to review the last Metro opening.

The Silver Line opened mid 2014 in the Tysons area. There are several hi rises condos within walking distance to 2 of the new stops. I thought researching how prices fared in those buildings 2 years prior to the opening, the year of the opening and two years post opening would give me the answer.

Of course, every year in real estate has a different price trend so the price trend in those buildings alone would not answer the question. The real number we needed to determine was how those condos compared to the overall market during those years.

The there condos I looked at were the Rotonda, The Encore and The Regency. All are less than a mile to a Silver Line stop

Here are the results

 All Fairfax County HomesAll Fairfax County CondosThe 3 Condos Combined
YearAvg Sale........% ChangeAvg Sale.......% ChangeAvg Sale.......% Change
2012$493,890..................4.7%$251,481................7.6%$357,622..............10.1%
2013$531,56....................7.6%274,468..................9.1%$413,925..............15.7%
2014$538,280.................1.3%281959...................2.7%$406,334.............-1.8%
2015$544,055.................1.1%285930...................1.4%$381,119.............-6.2%
2016$544,416.................0.1%282191.................-1.3%$375,833...............-1.4%

I am glad I didn’t answer the question with my gut because I would have been wrong. I thought that once the Metro opened, prices would beat the market..

I was wrong.

This chart shows that the excitement of a new metro stop factors more into the pricing than the actual opening.

In the two years proceeding the opening, price appreciation for the condo group was almost double the average appreciation in Fairfax County and significantly greater than the average appreciation of Fairfax County condos.

During the year of the opening, the three condos were a little worse than the market average. I am not enough of a student of statistics to know if that is meaningful.

Then in the year after the opening they did far worse. Two years after the opening they seemed to be following the market rhythm.

By the way in each of the years reviewed, the number of condos sold in those three buildings totaled between 56 and 78 so it was a pretty decent sample size.

When I reviewed the results of my findings, the heir said let’s sell sooner rather than later. Then Corona virus hit and that’s a whole different real estate story……

Picture credit © Lei Xu | Dreamstime.com

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